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G&G Closed Circuit Events, LLC v. Castillo

United States District Court, N.D. Illinois, Eastern Division

August 5, 2019

JAIME F. CASTILLO, et al., Defendants.


          Honorable Edmond E. Chang, United States District Judge.

         G&G Closed Circuit Events, LLC, a distributor of pay-per-view events, sued Jaime Castillo, Maria Castillo, and their company, El Bajio Enterprises (for convenience's sake, collectively referred to as the Castillos), for illegally broadcasting a boxing match in violation of 47 U.S.C. § 605.[1] The case went to trial, where the jury found in favor of G&G, but also found that the Castillos were not aware, and had no reason to know, that they were violating Section 605 when they broadcast the fight. The Castillos now move for judgment as a matter of law or, in the alternative, a new trial. Both parties have also submitted briefing on damages, which is determined by the court in these types of cases. For the reasons discussed below, the Castillos' motions are denied, and the Court awards G&G $800 in statutory damages.

         I. Background

         In setting forth the facts in this post-trial setting, the evidence is interpreted in G&G's favor on liability, because G&G prevailed on that issue. On willfulness and commercial advantage, however, the Castillos won, so the evidence on those issues is read in their favor.

         A. G&G

         G&G was a commercial distributor of pay-per-view events, including special sporting events, concerts, and boxing matches. Trial Tr. at 159:19-22. Founded in 2009, it worked with networks like Showtime and HBO to advertise, sell, and distribute pay-per-view events to commercial accounts like bars, restaurants, and nightclubs. Id. at 160:1-14. G&G had “exclusive rights” to the events it distributed, meaning any commercial establishment that wanted to play the event needed to go through G&G and pay them a licensing fee. Id. at 160:15-24. The fee varied based on the capacity of the commercial establishment. Id. at 162:12-21. G&G in turn either split that fee with the network or paid the network an up-front fee for the right to distribute the program. Id. at 160:23-161:4. All that was for distribution at commercial establishments; G&G has never acquired or sold rights for residential distribution. Id. at 169:1-8.

         G&G alleges that it owned the commercial-distribution rights to a boxing match between Austin Trout and Saul Alvarez televised on April 20, 2013 (call it the Program, for convenience's sake). Trial Tr. at 555:13-17. G&G's president, Nicholas Gagliardi, testified that G&G had a “split deal” with Showtime for the Program- G&G kept 30% of money generated from selling the Program to commercial accounts, and would send the remaining 70% back to Showtime. Id. at 161:17-24. Gagliardi explained that G&G's deals with Showtime were often set up in this way and were historically arranged by Gagliardi's brother, who “had been working with Showtime for several years in doing distribution.” Id. at 161:17-21. Gagliardi also testified about a “rate card” that G&G gave to its sales representatives for the Program. The card showed that an establishment with a capacity of 0-100 people would need to pay $800 to play the Program. Id. at 164:8-165:14, 166:21-167:3. Included in this fee was the cost to activate an account through either DirecTV or DishNetwork, because access to those providers was required to show the Program. Id. at 167:7-13.

         Gagliardi also testified that, in lieu of a formal written contract, G&G's deals with Showtime were typically discussed via email and phone. Trial Tr. at 170:19-171:3. Despite the history of email communications, Gagliardi was unable to find emails with Showtime negotiating the rights to the Program because his computer had been corrupted, and he was not able to restore it. Id. at 171:4-10. But G&G was able to present, at trial, the check it sent to Showtime after the Program was broadcast, representing 70% of the total distribution sales, or $220, 331. Id. at 172:7-173:17. The check referenced the date of the Program on the memo line, and Gagliardi testified that G&G sent the check to Showtime and that the company cashed it. Id. at 173:18-174:4.

         On top of its agreement with Showtime, G&G had a separate written agreement with DirecTV, the satellite provider for the Program. Trial Tr. at 174:23- 175:18. Gagliardi explained that the agreement required any commercial account ordering the fight through DirecTV to purchase it through G&G. Id. at 178:22-179:4. G&G presented the agreement-entitled Program Exhibition Agreement-at trial, although the copy shown to the jury was signed only by Gagliardi on behalf of G&G. Id. at 177:2-5, 181:14-24. Gagliardi explained that DirecTV would prepare and send the agreements to him, and that the copy of the Program agreement he was able to track down was the version he signed and returned to DirecTV, rather than the fully executed version. Id. at 181:20-24, 183:2-9. Gagliardi clarified, though, that the two parties had an executed agreement pursuant to which he paid DirecTV money to broadcast the program. Id. at 182:3-9.

         G&G also presented a document referred to as the domestic distribution rights agreement. Trial Tr. at 182:10-12. Gagliardi explained that he likely provided this document to G&G's attorney and sales representatives because it explained that Showtime had granted G&G “exclusive domestic closed-circuit distribution and licensing rights” to the Program. Id. at 182:13-18, 183:19-184:17. Gagliardi testified that G&G had commercial licensing agreements for the Program with Buffalo Wild Wings, Hooters, Dave & Buster's, and several other national chain restaurants, along with other smaller businesses. Id. at 192:18-22.

         Gagliardi also discussed the ways commercial customers are able to “steal” a program, meaning broadcast the program without paying for it. He explained that technology and streaming had made it much easier for businesses to broadcast pay-per-view programs without paying the requisite fee, and that this “has a great impact on [his] business.” Trial Tr. at 186:12-20. According to Gagliardi, every time a commercial location pirates a broadcast, it has a ripple effect beyond that one establishment-it discourages other establishments from purchasing because they feel that it is not worth it if other nearby businesses are showing the same program for free. Id. at 187:2-8. As a result, G&G hires investigators to locate businesses that illegally broadcast their programs. Id. at 191:4-15.

         B. La Peña

         La Peña was a Chicago restaurant owned and operated by Jaime and Maria Castillo. Trial Tr. at 345:23-346:1; 347:16-24. The Castillos opened the restaurant in 2001 after they bought the building in which La Peña is located. Id. at 346:2-12. In addition to the restaurant on the first floor, the building has four apartments upstairs, including the apartment where the Castillos live. Id. at 346:15-24. In 2013, the Castillos had accounts with multiple cable providers. They had accounts for their apartment with Comcast and Dish Network, as well as an account with DirecTV for the restaurant. Id. at 350:24-351:23. Jaime testified that he was the one to set up all of the accounts, including the DirecTV account for La Peña, which he opened in November 2011. Id. at 351:9-352:3. Jaime testified that he believed (in his own mind) that the DirecTV account was set up in La Peña's name as a business account, but it is undisputed that it was actually set up as a residential account in Jaime's name. Id. at 352:20-355:25.

         For the entertainment of La Peña's customers, the Castillos play different types of music and also show sports and other programming on a number of televisions in the restaurant. Trial Tr. at 380:8-381:18. It is undisputed that on April 20, 2013, some La Peña employee played the Program on the televisions around the bar in the restaurant. Id. at 384:2-10. Jaime testified that this happened only because a customer came into La Peña and asked to watch the Program. Id. At trial, Jaime could not remember what the customer looked like. Id. at 386:15-24. But at her deposition, Maria testified that Jaime told her that the customer who asked to watch the Program looked “Hispanic.” Id. at 487:22-489:12. In any event, as far as Gagliardi knows, G&G never authorized La Peña to show the Program. Id. at 185:20-22.

         On the night of the Program, a private investigator working for G&G's attorney-Aaron Lockner-was driving around Chicago looking for businesses that were illegally broadcasting the Program. Trial Tr. at 261:19-262:12. Lockner received a list of businesses that paid for the Program ahead of time, so he was “basically hunt[ing] around and search[ing] around for places that were not on that list.” Id. at 262:15-18. Lockner was paid for his work based on the number of commercial establishments he found in violation and reported on, meaning he was incentivized to find as many violators as possible. Id. at 263:8-19. If he found violators, then his job was not to ask them to turn off the Program, but rather to discreetly take pictures and video of the broadcast as evidence of the violation. Id. at 265:15-266:17.

         Lockner testified at trial that he noticed La Peña on the night of the Program, because he could see, as he was driving by, a boxing match on the televisions inside. Trial Tr. at 269:11-15. He then walked inside the restaurant where he saw four wall-mounted televisions playing the Program. Id. at 278:14-19, 280:19-281:18. Lockner was able to catch some of the Program on his camcorder from inside the restaurant; the video was played at trial. Id. at 289:5-290:15. He also read from the affidavit that he wrote and executed; the affidavit's content was based on the notes he took that night. Id. at 278:14-19, 300:13-22. In the affidavit, Lockner explained that he watched Rounds 4 and 5 of the fight; he estimated that the capacity of the restaurant was 120 people; and that he counted between 60 and 65 patrons in the restaurant. Id. at 282:18-283:12. After recording the video inside La Peña, Lockner walked out and took additional video of the outside of the restaurant (that video too was played at trial). Id. at 294:22-295:6; 298:5-15. In the video, it is possible to see a boxing match playing on the TVs through the front window. Id. at 295:7-296:7.

         At trial, Lockner testified that he did not ask anyone in La Peña to turn on the Program because it was not “honest.” Trial Tr. at 296:13-24. Lockner also stated that he does not speak Spanish, he is not of Spanish descent, and that he had long hair, past his shoulders, in 2013. Id. at 279:20-23, 296:25-297:10. According to his affidavit, Lockner was in La Peña for 10 minutes and then took the film outside on the sidewalk for just another minute or two. Id. at 299:8-17, 300:10-12. He also testified that he did not speak to anyone inside of La Peña, either customer or staff. Id. at 311:8-23.

         C. ...

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