United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
Honorable Edmond E. Chang, United States District Judge.
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. §
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
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.
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.
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
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.
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.
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.
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.
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.
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.
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.
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
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