Innovative Sports Management v. Costanza Ruiz Arias

Background

Innovative Sports Management, Inc. alleged that 818 Sports Bar & Grill, Inc. and its owner, Jeanette Arias, showed a televised soccer game without permission. Innovative Sports alleged that it held exclusive nationwide distribution rights for the telecast. The defendants did not answer the complaint or otherwise participate, and the clerk entered default. Innovative Sports then moved for default judgment under Federal Rule of Civil Procedure 55(b).

The court first found that it had federal-question jurisdiction over the signal-piracy claims and supplemental jurisdiction over the state-law claims. It also found that the defendants had been properly served.

Default judgment

A default judgment is a judgment entered when a defendant fails to respond or participate. After default, well-pleaded allegations are generally treated as true, except for the amount of damages. The court considered the factors governing default judgment, including the merits of the claims, the adequacy of the complaint, possible prejudice to Innovative Sports, the possibility of a factual dispute, and whether the defendants’ failure to respond resulted from excusable neglect.

The court granted default judgment in part. It ruled that Innovative Sports was entitled to judgment under 47 U.S.C. § 553, which addresses unauthorized interception or receipt of communications services offered over a cable system. But it denied default judgment under 47 U.S.C. § 605 because the record did not show that the game was displayed using a satellite television signal or that the defendants received satellite television or internet services.

The court also ruled for Innovative Sports on its conversion claim. It found that the defendants wrongfully converted Innovative Sports’ property, causing lost profits. The court further found Jeanette Arias vicariously liable because she received a direct financial benefit from the interception and had the right and ability to supervise the infringing activity.

Damages and disposition

The court awarded $8,500 in statutory damages under section 553. It declined to treat an award from the same defendants in a prior related proceeding as a required minimum, but found $8,500 reasonable because the same defendant had engaged in the same misconduct. The court also awarded $550 for conversion, representing the value of the right to display the game at the defendants’ establishment.

The court ordered that judgment be entered for Innovative Sports in the amount of $9,050 on the section 553 and conversion claims, after any request for attorneys’ fees and costs was resolved. Innovative Sports could submit a request for attorneys’ fees and costs under section 553(c)(2) by December 15, 2023.