Settlement Discussion Notes

Initial Discussion

• Russell represents the owners, and Alex is the manager.

• Erica represents the plaintiff, Joe Hand Promotions .

• The owners are new to business and unaware of commercial licensing for broadcasting events.

• They paid for the fight, assuming it covered their situation.

Business Details

• The establishment is a small, restaurant-style hookah lounge with 40 seats.

• It's not a high-capacity venue.

• The business is only a year old and still trying to break even.

• The owners want to demonstrate that showing the fight didn't result in significant profit.

Understanding the Violation

• Erica acknowledges the difference between non-willful and willful violations.

• Even though the owners paid for the fight residentially instead of commercially, it's still a violation.

• Johann Promotions sells commercial licenses to protect their business model.

• The owners argue they couldn't find the specific commercial license option from Johann Promotions when purchasing the fight.

Terms of Service and Account Types

• The violation stems from using a basic cable account and personal streaming service accounts (Netflix, Hulu, etc.) in a commercial setting.

• These services' terms of service are for personal, not business, use.

• Commercial accounts with cable/satellite providers are required to legally show content in a business.

• These providers would block pay-per-view events and direct businesses to commercial promoters like Johann Promotions.

• The issue arises because streaming services don't re-verify user status (personal vs. business) after the initial signup.

Mitigation and Future Intentions

• The owners want Johann Promotions to consider their situation as a new business and offer affordable rates for future events.

• They are willing to share POS data to prove their limited profits from the fight night.

• They seek a long-term relationship for future broadcasts.

POS System Data

• Alex will present the POS system numbers to demonstrate the actual profit made during the fight.

• The owners offer full transparency and access to their POS system for verification.

• Erica notes that actual access to the POS system is rare unless litigation occurs.

Commercial Fight Costs

• Commercial fight licenses vary in price based on the fighters and the venue's fire code occupancy.

• Davis vs. Roach fight would've cost around $1071$ for a commercial license.

• Popular fighters like Canelo can range from $2500$ to $6000$ depending on establishment size.

• UFC fights have yearly subscription costs.

Profitability Analysis

• Net sales during the fight were $3427.75$, with gross sales at $3771.50$.

• The profit during the fight period was approximately $1048$.

• The cost of the license would have negated any profit.

Subscriber Benefits and Competition

• Johann Promotions' clients can charge cover fees due to their commercial licenses.

• Businesses that illegally show fights create unfair competition and can be reported via Barfinder.com.

• Barfinder.com lists legal establishments for viewers.

• Subscribing to all fights versus ordering individual events depends on customer base and potential revenue.

Clarification of Profit Calculation

• The owners clarify that they made around $3427$ during the fight.

• After accounting for service charges, labor, liquor, food, and hookah costs, they profited about $1050$.

• They paid $90$ each for three screens to show the fight, totaling $270$.

Future Compliance

• The owners acknowledge they will obtain the necessary licenses for future fights.

• They emphasize this was their first violation and that they have all other necessary licenses (hookah, food, liquor).

• They mistakenly assumed the rules were similar to broadcasting FIFA World Cup matches, which doesn't require a license.

World Cup Licensing

• World Cup broadcasts are handled by Integrated Sports Media.

• Erica offers to provide contact information for Integrated Sports Media.

• She advises contacting her to verify if an event requires a separate license.

Event Timing and Advertising

• The decision to show the fight was made last minute.

• The lounge is primarily a hookah lounge, and the fight was intended as additional entertainment.

Insurance Coverage

• Erica asks if the owners have general liability insurance to cover potential intellectual property rights violations.

• The owners currently only have minimal insurance coverage due to being a new business.

Plea for Leniency

• Erica agrees to convey their situation to Johann Promotions, emphasizing their new business status and lack of intent to circumvent the law.

• The owners can provide proof that this is their first business venture in the US.

• They want Johann Promotions to consider their limited profit and the potential impact of a $25,000$ settlement, which could force them to close.

• They express shock at the $25,000$ demand.

Settlement Authority and Litigation History

• Johann Promotions previously pursued lawsuits without attempting pre-litigation settlements.

• After COVID, they authorized Erica's firm to settle cases for $25,000$, avoiding costly court proceedings.

• Any settlement amount below $25,000$ requires client approval.

Desired Future Relationship

• The owners reiterate their desire for a continued, lawful business relationship with Johann Promotions at an affordable price point.

• Erica will meet with Johann Promotions to discuss the matter and provide a response shortly.