Why TV piracy lawsuits are costing Phoenix's mom-and-pop restaurants thousands of dollars - AZCentral.com

Priscilla Totiyapungprasert The Republic | azcentral.com

Published 10:19 AM EST Feb 21, 2020

Showing a boxing match or 15 minutes of a soccer game on TV — that’s all it could take for a restaurant to land in the crosshairs of attorney Thomas P. Riley.

That’s what happened to Oscar Graham, chef and owner of Los Andes Peruvian Cuisine in Phoenix. Restaurants have long been a part of Graham’s livelihood, but now an expensive lawsuit could jeopardize that. 

Riley’s law firm, based in Southern California, has sued Graham for TV signal piracy, a form of copyright infringement.

Riley’s firm has been involved with at least hundreds of lawsuits across the country that deal with TV and copyright violations. He's one of a number of attorneys in the U.S. who represent sports promoters and licensing distributors that own the rights to televised events.

In some cases, undercover investigators go into businesses to find incidents of cable or satellite TV piracy, which they can document as evidence for a lawsuit.

Many lawsuits for copyright infringement in Arizona have involved small businesses, as well as immigrant-owned businesses and owners with limited English communication skills, said Marcos E. Garciacosta, a Mesa-based bilingual attorney who focuses on trademarks and intellectual property. 

Garciacosta represents Graham, an immigrant from Peru who communicates mostly in Spanish.

"It’s a cottage industry, basically," Garciacosta told The Arizona Republic. "There are attorneys who specialize in suing or threatening to sue small businesses."

"Many times when they go through a lawsuit, small-business owners don’t know what to do," he said. "They end up losing by default."

'The restaurant is
my life effort'

On a recent afternoon at Los Andes, the restaurant's bespectacled owner takes care of paperwork during the lull between lunch and dinner. 

Graham’s restaurant shares a strip mall with Food City on the northeast corner of 27th Avenue and Bethany Home Road. The floor has green-and-white checkered tiles, and Inca-patterned textiles lay on each of the nine tables.

A Peruvian flag, protected in plastic, hangs behind the counter. A beverage dispenser mixes chicha morada, a drink made from purple corn. There are two flat-screen televisions installed in opposite corners of the restaurant.

In 2019, Riley sued Graham on behalf of media company Innovative Sports Management Inc., which does business as Integrated Sports Media. The media company is a licensor based in New Jersey that distributes live sports events.

The company accuses Graham of unlawfully broadcasting a soccer game at Los Andes.

Integrated Sports Media owns the distribution rights to the program, and showing the soccer game violated federal telecommunications and copyright laws, according to the complaint. The media company demands $320,000 in damages.

It’s not uncommon for the company to demand upward of $100,000 in damages.

Graham disputes the allegations made against him and has chosen to fight the lawsuit — even though losing means he would have to close the restaurant, he said.

"Closing the restaurant would have a profound effect on me mentally because the restaurant is my life effort and only source of income," Graham said. "At 71, I believe it would put me in a tremendous, nervous crisis, more than what I'm going through now with this injustice."

READ:  Letter from Offices of Thomas P. Riley to Los Andes owner Oscar Graham

Riley's law office has threatened legal action against other businesses in Arizona, including at least four other Peruvian restaurants. 

The Arizona Republic emailed and called Riley's office, leaving multiple messages, but did not hear back.

How TV lawsuits can be
a profitable business

John Gray, a Phoenix-based lawyer who focuses on intellectual property and commercial litigation, said some law firms make it a goal to profit from potential infringers as efficiently as possible. Gray does not represent Los Andes nor the law offices of Thomas P. Riley.

A demand letter from these firms may come with a lawsuit or the threat of a potential lawsuit, which may pressure the business to pay a settlement, he said.

"If the goal is to quickly extract some economic value from a demand letter or lawsuit, if that’s your strategy, then one way to approach that would be to try to go after where you would have most leverage," Gray said. "You have the most leverage against smaller businesses less likely to have resources to mount a viable defense."

For immigrants, cultural misunderstandings and language barriers can make it even more challenging to defend themselves, Gray said.

Gray said this type of practice can be profitable. The damages awarded from copyright infringement typically go to the copyright owner, but a lawyer could receive a cut of that money, depending on his or her agreement with the client.

"Each particular case might not be worth a ton of money in the grand scheme of things," Gray said. "But it could be worth a lot to a particular defendant. If you do enough of them, you can make a decent amount of money based on volume."

More than 5,400 lawsuits involving unauthorized reception of cable or satellite TV have been filed in federal courts since 2010, according to a records search. 

According to federal court records, since 1993 Riley has filed more than 700 lawsuits in multiple states on behalf of his clients, which have included J & J Sports Production, Joe Hand Promotions and G & G Closed Circuit Events — companies that distribute pay-per-view boxing matches and UFC fights.

The court records don't show how many demand letters Riley has sent or the number of people who settled early to avoid litigation.

In 2009, Riley filed a lawsuit against an American Legion post in Chino, California, for $150,000 and $160,000 in a dispute over two pay-per-view boxing matches shown at the legion hall, according to a Los Angeles Times report. The veterans group said they were unaware they had the wrong license and tried to settle for $20,000.

In another case in California, Riley sued 8 Ball Tavern for unlawfully broadcasting a 2014 boxing event. But the owners of the bar insisted they never showed the fight. The blurry cellphone video used as evidence showed a commercial, but no boxing match, NBC reported.

Riley isn't the only attorney who represents clients like these.

Julie Lonstein, based in New York, has filed thousands of lawsuits on behalf of broadcast providers and distributors, some of which overlap with Riley's clients. The Republic spoke to Lonstein on the phone, but she declined to comment on her practice because Integrated Sports Media is also one of her clients.

Why navigating TV licensing can be a challenge

Navigating the TV licensing system can be tricky.

Sporting events, like movies, are copyrighted under federal law. People need to purchase a license to show copyrighted material, and different licenses are required depending on the location and purpose of showing the material. Not having a license or having the wrong license can put someone at risk of copyright violation.

That means, for example, a bar owner can’t use a home license instead of a commercial license to show a pay-per-view UFC fight at his or her bar. Trying to follow protocol can get complicated, though.

Karen Velarde helps her father, José Ramirez-Sanchez, with their small family restaurant El Chullo in central Phoenix. They recently opened a Peruvian market next door and have a second restaurant location underway.

But in 2018, a legal problem almost upended them.

Velarde said she called DirecTV to purchase the Peru vs. Croatia soccer match. The person she spoke to on the phone told her she would be able to get the game without making any additional purchases, Velarde said.

Her family didn’t promote or invite people to come watch the game, but as their restaurant is a hang-out spot for the Peruvian community, friends and customers gathered at El Chullo and expected to see the game, she said.

As kick-off time approached, the channel still wasn’t available, Velarde said. She faced a restaurant full of restless patrons. After multiple phone calls to DirecTV, someone at the company told her she would have to contact a third party, Integrated Sports Media, which owned the rights to the game.

Velarde said she called the third-party company to purchase the game but was unable to get through to anyone. By then it was halftime, so to improvise, Velarde played the game on one of the TVs through a Peruvian TV app her sister purchased.

The next day, someone from Integrated Sports Media contacted her and she explained her failed attempts to purchase the game — which she thinks set her father up for what happened next, Velarde said.   

Months later, Riley sent Ramirez-Sanchez a letter on behalf of Integrated Sports Media, stating he and his client believe showing the soccer game at the restaurant violated his client’s broadcast rights.

"We are a very small community, so people were looking to just be with other people in our community," Velarde said. "I wanted to work it out with them. I tried to explain to them, this is a little restaurant, a little mom-and-pop shop."

Ramirez-Sanchez said he managed to settle the claim for $5,000 and avoid a lawsuit. At the time the family was purchasing property for the second location of El Chullo, so they wanted to avoid legal troubles, Velarde said.

The Republic spoke to Doug Jacobs, president of Integrated Sports Media. He declined to comment on any legal matters, but said people can call his company at any time to order an event — even after the event has already started, Jacobs said. If the caller doesn’t get through to one of the company’s employees, the caller can try contacting another employee or send the company an email, he advised. 

Showing an event at a commercial establishment can cost anywhere from a hundred dollars to thousands, depending on the event and capacity of the location, he said.

David Wimberley, who runs George & Dragon pub in central Phoenix, said his business has a commercial subscription with Cox and DirecTV. His pub regularly shows soccer games from the English Premier League and other major worldwide leagues, as well as international soccer tournaments.

To add or remove channels, Wimberley calls the cable company. One year, when he wanted to show the UEFA European Championship, he had to pay $7,800 upfront to Setanta Sports, a TV company from Ireland, he said.

A license for commercial use costs significantly more than for personal use, he said. He estimated his monthly cable bill at the bar comes to about $1,000 a month, compared with about $150 at home with the cost of internet, phone and movie channels removed.

But if one soccer game can attract 20 more customers to the bar, it’s worth it, Wimberley said. He’s never run into any disputes with a media company, he added.

What happened at
Los Andes restaurant?

On Oct. 12, 2018, Peru played Chile in a soccer game. Los Andes had been receiving phone calls from people asking about the game, Graham recalled in an interview with The Republic.

But Graham and his employees told callers they weren't showing the game, he said.

Later that day, a man visited the restaurant at dinnertime, Graham said. The guest took the TV remote control from the restaurant counter and, after assuring an employee it was "legal," streamed the soccer match via the internet on one of the TVs, according to Graham’s response to the complaint.

The man stayed to watch the game and afterward, a woman entered the restaurant. She sat down and began recording a video of the TV screen with her cellphone. She left without ordering any food, restaurant employees told Graham and The Republic. 

The Republic viewed the two video clips Graham received. One is about three minutes long; the other is about a minute long. The videos show what looks like possibly several or more people watching a soccer game on TV. The person recording the video is never seen in the frame.

After the incident, Graham received a letter dated Nov. 30, 2018. In it, Riley wrote Graham violated the exclusive broadcast rights owned by Integrated Sports Media. If Graham paid a settlement, he would avoid a “costly federal lawsuit” with damages "in excess of $100,000,” according to the demand.

Before signing off, Riley urged Graham or his attorney to contact him.

Graham and Riley could not come to an agreement, however, and on Oct. 9, 2019, Integrated Sports Media sued Graham. The lawsuit alleges Graham directed the employees of Los Andes to “unlawfully intercept and broadcast” the soccer game for financial gain.

Graham denies the company's claims. He also believes that an investigator tried to set him up. 

‘Everyone uses live investigators’

Investigators in this field are people hired by either a law firm or its clients to find and document potential TV piracy. According to Riley's website, his law firm provides "investigative services to promoters, licensors, and closed-circuit distributors on more than 600 televised events." His website has a scrolling list of past events, including the Andy Ruiz Jr. vs. Anthony Joshua II boxing match in December 2019. 

U.S. District Court records show that in Graham’s response to the lawsuit, his attorney refers to the restaurant guest who took the TV remote as "the agent” of Integrated Sports Media.

In a letter to Riley dated Dec. 12, 2019, Garciacosta also wrote: "My client never announced the event, they never set it up on the TV and it was your agent that actually took the remote and tuned the TV in the website doing the transmission."

Jacobs from Integrated Sports Media acknowledged that his company, “like anyone who’s protecting their rights,” has investigators who go out in the field.

“Cable companies do it, DirecTV does it for NFL Sunday Ticket,” Jacobs said. “People handling fights and soccer games, they have a lot invested; everyone uses live investigators to go out into locations and police locations.”

Trevor McCann is a Bay Area lawyer who has handled signal piracy litigation since 2006, typically representing the defendant. McCann, who said he has cross-examined an investigator in federal court, also provided The Republic with copies of online advertisements that show Riley's firm has solicited investigators in the past. 

"All means of transmission (cable, satellite, streaming) will qualify," reads one ad from 2010. "This is a covert surveillance; no contact with offenders is required."

“You go in, you observe, you sign an affidavit, you transmit it to Tom Riley, and prompt payment will be made,” McCann said. “And that right there is a hit.”

A court document obtained by The Republic shows that in 2018 in Oregon, an attorney for J & J Sports Productions filed a bill that included $610 in investigator fees. A 2017 case in Maryland shows the same company requested $600 in investigator fees.

In the past, investigators would walk around certain neighborhoods, including the Mission District in San Francisco, which has many Latino-owned businesses, McCann said. He has represented three clients from that neighborhood. Social media has now provided another way investigators can find potential violators, he said.

Prolific investigators will pop in and out of different establishments to collect as many hits as possible. Three to six hits in one outing could add up to $1,800 from one night of work, he said.

For their affidavits, investigators will typically try to describe someone who works at the establishment to prove they were there, provide a headcount of everyone in the establishment, and look for any form of advertising for the event, such as flyers.

“Many years ago, (the people who provided) affidavits ordinarily contained some type of qualifications, like private investigators,” McCann said. “Now it’s any Tom, Dick or Sue.”

Though Riley's office coordinates investigators, it does not verify an investigator's credentials, he added.

READ:  Text from advertisement seeking investigators for Law Offices of Thomas P. Riley 

An investigator could try to manufacture a hit by persuading a business owner to show an event when the owner wasn’t planning to, he said. McCann currently represents two clients who maintain third parties contributed to their alleged violations.

If an entity sends out an investigator to document a violation, and that investigator causes a business owner to violate the entity's rights, the business owner still can be held liable, McCann said.

“If that was done by a government agent, that would be called entrapment,” McCann said.

Other metro Phoenix restaurants have been accused

Jorge Benavente faced a similar predicament to Graham's. He owned a Peruvian restaurant in Mesa called Inka Fest. A few years ago a customer put on a boxing match at his restaurant, without his permission, he told The Republic.

After the incident, he said he received a letter from Riley accusing him of TV piracy. He learned from the affidavit that a woman had come into the restaurant, asked for a glass of wine and documented evidence of the boxing match. Benavente said he wasn't aware of the woman until he read the affidavit.

After consulting with lawyers, Benavente decided to avoid a lawsuit by settling for $10,000, which he paid in installments of $400 a month for 25 months, he said.

Benavente recently died from a heart attack, friends of Benavente told The Republic.

In 2019, Franklin Jauregui and his business partner ran Tumi, a Peruvian restaurant in Chandler. That year they were sued by Riley, on behalf of Integrated Sports Media, for $170,000 each. 

The incident occurred in 2018 on the day of a soccer match between Peru and Scotland. Jauregui said he was fielding phone calls from people who wanted to know if he was showing the game. He told them no, he said. 

Later that day, however, one restaurant guest insisted on streaming the game via YouTube on a smart TV and persuaded Jauregui to try showing the game. They were able to find a live stream, but the poor quality stream kept cutting off so they stopped. That guest, however, took cellphone photos of the game showing on the restaurant's TV, Jauregui noticed.

“We don't charge; we don't promote; we don't earn any money from that game; it was only 15 minutes on YouTube,” Jauregui said.

About a year later, Riley and Integrated Sports Media served him with a lawsuit. Jauregui believes the restaurant guest had intended to put him in a risky situation.

Jauregui no longer owns Tumi and wants to have a peaceful settlement. He's unemployed now and can't afford his own lawyer, he said.  

"I am alone," Jauregui said.

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What's next for Los Andes

Graham has spent much of his adult life in restaurants. He cooked in New York and Los Angeles before moving to the Valley in 2010. He helmed the kitchen at Contigo Peru in Mesa, then opened Tumi Fine Peruvian Cuisine in Chandler before selling it and opening Los Andes in July 2018.

On any given day in his restaurant, diners converse in Spanish over polla a la brasa — chicken marinated in 12 spices — or while helping themselves to a ceviche medley of white fish, shrimp, scallops and octopus served with yam and Peruvian corn.

Graham is 71 now, and Los Andes is his only source of income, he said. The restaurant also employs two full-time workers and four part-time workers, who would lose their jobs if he has to close the restaurant because of the lawsuit. 

A pretrial meeting to discuss the case’s progress is scheduled Nov. 16 with U.S. Magistrate Judge Deborah M. Fine.

He hopes winning the lawsuit will bring justice not only for himself but also for other business owners who face a similar predicament. 

"I would feel very happy and satisfied, because it would put a stop to this type of people who want to make easy money at the expense of humble people who fight day by day and help other people who need to work," Graham wrote in an email.

Got a tip about something happening in the food industry? Reach the reporter at Priscilla.Totiya@azcentral.com or 602-444-8092. Follow @priscillatotiya on Twitter and Instagram.

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