Innovative Sports Management, Inc. v. Nunez

Background

Innovative Sports Management, Inc., doing business as Integrated Sports Media, alleged that Fernando Vasquez Nunez, Humberto Vasquez, and Emelina’s Peruvian Restaurant unlawfully intercepted and displayed the Peru v. Ecuador soccer match at the restaurant on February 1, 2022. The plaintiff alleged claims under Sections 605 and 553 of the Communications Act, California’s unfair-competition law, and California conversion law. The plaintiff claimed exclusive nationwide commercial distribution rights to the program.

The individual defendants were identified as Emelina’s chief executive officer and director, and chief financial officer, respectively. The defendants were served, but they did not respond. The clerk entered default on March 8, 2023. The plaintiff then moved for default judgment.

Jurisdiction, Service, and Default Judgment

The court found that it had subject-matter and personal jurisdiction, venue was proper, and service of process was valid. The court applied the factors used to decide whether default judgment should be entered, including prejudice to the plaintiff, the strength of the claims, the amount at stake, the possibility of a factual dispute, whether the default resulted from excusable neglect, and the preference for decisions on the merits. The court concluded that the factors supported entering default judgment despite the general preference for resolving cases on their merits.

Section 553 Liability

The plaintiff’s complaint sought relief under both Sections 605 and 553. Section 605 concerns interception of satellite broadcasts, while Section 553 concerns interception of communications offered over a cable system. The court stated that the plaintiff could not recover under both provisions for the same interception.

The court found that the complaint and supporting evidence showed that the program was displayed at Emelina’s. However, the plaintiff did not establish whether the program had been obtained through a cable system or satellite transmission. Because cable was more likely under the circumstances, the court construed the motion as seeking default judgment under Section 553 rather than Section 605. The court granted relief under Section 553.

The court also held that Nunez and Vasquez were individually liable under a vicarious-liability standard borrowed from copyright law. That standard requires a right and ability to supervise the unlawful conduct and a direct financial interest in it. The court found that the allegations concerning their positions, their ability to supervise the restaurant’s activities, and the alleged increase in the restaurant’s profits sufficiently supported both requirements. Nunez and Vasquez were therefore jointly and severally liable for the Section 553 award.

Conversion

Under California law, conversion requires ownership or a right to possess property, a wrongful act involving that property, and damages. The court found that the plaintiff sufficiently alleged conversion based on its commercial distribution rights and the unauthorized display of the program.

The court found Emelina’s liable for conversion, but not Nunez and Vasquez. Corporate officers and directors are not personally liable for a corporation’s tort merely because of their positions; the allegations must show that they participated in, authorized, or directed the wrongful conduct. The court found the allegations that Nunez and Vasquez specifically directed or permitted employees to engage in the conduct were conclusory and did not sufficiently show authorization or direction.

Damages and Disposition

The court awarded $550 in statutory damages and $1,100 in enhanced damages under Section 553, for a total of $1,650. It considered the small number of patrons and televisions, the absence of an alleged cover charge, increased food prices, or advertising, and the lack of alleged prior offenses.

The court also awarded $550 in conversion damages to the plaintiff against Emelina’s. Thus, Emelina’s was subject to total relief of $2,200, while Nunez and Vasquez were jointly and severally liable for $1,650. The court granted in part and denied in part the plaintiff’s motion for default judgment. The plaintiff was required to file its motion for attorney’s fees and costs within 14 days after entry of judgment.