E-Alert Case Updates

Maryland District Court Dismisses Plaintiff’s Claims under the Cable Act for Failing to meet the Twombly/Iqbal Standard

J&J Sports Productions, Inc. v. Maryland Food & Entertainment, LLC
No. 11-3344 (D. Md. Oct. 24, 2012)
by Wayne Heavener, Law Clerk
Semmes, Bowen & Semmes (www.semmes.com)

In J&J Sports Productions, Inc. v. Maryland Food & Entertainment, LLC, the United States District Court for the District of Maryland found that a plaintiff failed to sufficiently plead violations of the Cable Act with respect to a limited liability corporation's officers. In particular, the plaintiff, who claimed to hold exclusive broadcasting rights to a boxing match, failed to plead sufficient facts to pierce the defendant entity's corporate veil and impose personal liability on the defendant’s officers for showing the match in one of the defendant entity's establishments. The Court also examined the plaintiff's conversion claims, and reasoned that the plaintiff could not maintain an action for the conversion of intangible property under Maryland law. Therefore, the Court dismissed without prejudice the plaintiff’s allegations under the Cable Act with respect to the defendant entity's individual officers, and dismissed with prejudice all of the plaintiff's conversion claims.

J & J Sports Productions, Inc. brought suit against Maryland Food & Entertainment, LLC (Maryland Food) and its officers, Jerry Dianis, Judith Brown, and Lisa Haynes, in the United States District Court for the District of Maryland. Plaintiff asserted violations of the Federal Cable Communications Policy Act of 1984 (the Act) and common law conversion because the defendants, trading as BWX Lounge Courtside Sports Bar and Courtside Sports Bar & Grille, allegedly showed a boxing match between Floyd Mayweather, Jr. and Juan Manuel Marquez (the Program). According to plaintiff, it held exclusive nationwide television distribution rights to the match. In support of its position, plaintiff attached to its complaint an affidavit by Delanyo Appiah, averring that he was present at the BWX Lounge Courtside Sports Bar on September 19–20, 2009, and observed the Program on at least one of the establishment's televisions. The defendants moved to dismiss plaintiff's claims under FED. R. CIV. P. 12(b)(6). The defendants argued that plaintiff's complaint failed to meet the pleading standards of FED. R. CIV. P. 8(a)(2), such that the complaint failed to contain a "short and plain statement of the claim showing that the pleader is entitled to relief" as required under the Supreme Court's decisions in Bell Atl. Corp v. Twombly, 550 U.S. 554 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009) (Twombly/Iqbal Standard).

The Court noted that, under the Twombly/Iqbal Standard, a plaintiff must set forth facts sufficient to "state a claim to relief that is plausible on its face." Twombly, 550 U.S. at 570. The Court held that plaintiff alleged only that Mr. Dianis, Ms. Brown, and Ms. Haynes were Maryland Food's resident agents, liquor licensee, shareholders, or officers. The Court found plaintiff's allegations insufficient to pierce the "corporate veil" of Maryland Food, such that the individual defendants could be held liable. The Court rejected plaintiff's contention that, because the defendant officers appeared on Maryland Food's liquor license, a reasonable inference could be drawn that they supervised Maryland Food's alleged Cable Act violations. In particular, the Court found that "[a liquor license] does not create a free-standing exception to the "corporate veil doctrine for individual liquor licensees as to liability for any and all legal breaches allegedly committed by the licensed business entity." J&J Sports Prods, Inc. v. Maryland Food & Entertainment, LLC, No. 11-3344, slip op. at 9 (D. Md. Oct. 24, 2012).

Turning to plaintiff's Cable Act claims, the Court denied the defendants' motion to dismiss with respect to Maryland Food only. The Court held that plaintiff's claims fell within (1) 47 U.S.C. § 605, prohibiting interceptions of radio communications regardless of whether it originated over a cable TV network; and/or (2) 47 U.S.C. § 554, prohibiting interceptions from cable networks regardless of whether the communication originated as a radio broadcast. The Court rejected the defendants' argument that the claims were mutually exclusive. Assuming that Sections 605 and 554 reached entirely different conduct, plaintiff's allegations were sufficient to plead its claims in the alternative with respect to Maryland Food.

Finally, the Court dismissed with prejudice all of plaintiff's conversion claims respective to all defendants. The Court noted courts were split as to whether an action for conversion could be maintained under the Cable Act. The Court stated that districts were split in the circuits simply tracked differences in the applicable state laws. For example, California recognizes conversion of wholly intangible property, whereas Maryland does not. Because Maryland requires that any intangible property right, allegedly converted, must have been reduced into a transferable document, the court found that plaintiff's conversion claim should be dismissed.