Vondran Legal® - Sports Telecommunications Law - Joe Hand Promotions and the "Conversion" claim.  Call us if you received a call, letter or email from Joe Hand or G&G Closed Circuit.   We have helped many companies across the United States resolve these claims, sometimes brought as a lawsuit.  Call us at (877) 276-5084.

Introduction

The Conversion claim

One claim you may see brought when your club, wine bar, sports bar, restaurant, tavern or other establishment is accused of broadcasting a PPV boxing match without the proper license is a claim for "conversion."  These are typically brought under the relevant state law (not federal).  Here is a look at California's conversion cause of action, and elements a plaintiff would have to prove to succeed on this tort theory.  Below, I address a case on point where Plaintiff was awarded damages for conversion.

Welco Electronics, Inc. v. Mora (2014) 223 Cal.App.4th 202, 208-209 [166 Cal.Rptr.3d 877] was a California appellate case that gave a detailed overview of the tort of conversion:

Conversion is the wrongful exercise of dominion over the property of another. The elements of a conversion claim are:

(1) the plaintiff's ownership or right to possession of the property;

(2) the defendant's conversion by a wrongful act or disposition of property rights;

and

(3) damages. …

See Los Angeles Federal Credit Union v. Madatyan (2012) 209 Cal.App.4th 1383, 1387 [147 Cal. Rptr. 3d 768]; see CACI No. 2100; Gruber v. Pacific States Sav. & Loan Co. (1939) 13 Cal.2d 144, 148 [88 P.2d 137] [conversion is the wrongful exercise of dominion “over another's personal property in denial of or inconsistent with his rights therein”].) “ ‘Conversion is a strict liability tort.

The foundation of the action rests neither in the knowledge nor the intent of the defendant. Instead, the tort consists in the breach of an absolute duty; the act of conversion itself is tortious. Therefore, questions of the defendant's good faith, lack of knowledge, and motive are ordinarily immaterial.

The basis of a conversion action ‘ “rests upon the unwarranted interference by defendant with the dominion over the property of the plaintiff from which injury to the latter results. Therefore, neither good nor bad faith, neither care nor negligence, neither knowledge nor ignorance, are the gist of the action.” (Los Angeles Federal Credit Union v. Madatyan, supra, 209 Cal.App.4th at p. 1387; see PCO, Inc. v. Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP (2007) 150 Cal.App.4th 384, 395 [58 Cal. Rptr. 3d 516].) The unauthorized transfer of property constitutes a conversion. (See 5 Witkin, Summary of Cal. Law (10th ed. 2005) Torts, § 711(2), p. 1035 (Witkin).) Money may be the subject of conversion if the claim involves a specific, identifiable sum; it is not necessary that each coin or bill be earmarked. (Haigler v. Donnelly (1941) 18 Cal.2d 674, 681 [117 P.2d 331].)

(a) Credit Card Transaction as a Wrongful Taking of Property

The authorities have recognized the evolution of the common law tort of conversion. The California Supreme Court in Payne v. Elliot (1880) 54 Cal. 339 observed that at common law, trover was the remedy for conversion, which was limited to tangible personal property, “capable of being identified and taken into actual possession.” (Id. at p. 340.) The court said, “but the fiction on which the action of trover was founded, namely, that a defendant had found the property of another, which was lost, has become, in the progress of law, an unmeaning thing, which has been by most courts discarded; so that the action no longer exists as it did at common law, but has been developed into a remedy for the conversion of every species of personal property.” (Id. at p. 341.) The court concluded that the defendant's conversion of shares of stock, an intangible property interest (Ashton v. Heydenfeldt (1899) 124 Cal. 14, 16 [56 P. 624]), without converting the share certificates, constituted an actionable conversion (Payne v. Elliot, supra, 54 Cal. at pp. 341–342).

Generally, conversion has been held to apply to the taking of intangible property rights when “represented by documents, such as bonds, notes, bills of exchange, stock certificates, and warehouse receipts.” (5 Witkin, supra, Torts, § 702, p. 1026.) As one authority has written, “courts have permitted a recovery for conversion of assets reflected in such documents as accounts showing amounts owed, life insurance policies, and other evidentiary documents.

These cases are far removed from the paradigm case of physical conversion; they are essentially financial or economic tort cases, not physical interference cases.” (3 Dobbs, The Law of Torts (2d ed. 2011) § 710, p. 804 see Prosser, Handbook of the Law of Torts (2d ed. 1955) pp. 69–70.

[“It is now held that there may be an action for conversion, not only of the intangible rights represented by special instruments which give control, such as a check, a bill of lading, a bank book, an insurance policy, or a stock certificate, but also of such rights alone, as in the case of the corporate stock apart from the certificate. There is perhaps no essential reason why there might not be a conversion of a debt, the good will of a business, or even an idea, or ‘any species of personal property which is the subject of private ownership;' but thus far there has been no particular need for any extension of the remedy beyond commercial securities”]; but see Prosser & Keaton on Torts (5th ed. 1984) § 15, p. 92.)

In California, the tort of conversion has expanded well beyond its original boundaries. In holding that a misappropriation of a net operating loss without compensation constitutes conversion, the court in Fremont Indemnity Co. v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 124–125 [55 Cal. Rptr. 3d 621] (Fremont) said, “We recognize that the common law of conversion, which developed initially as a remedy for the dispossession or other loss of chattel [citation], may be inappropriate for some modern intangible personal property, the unauthorized use of which can take many forms.

In some circumstances,  newer economic torts have developed that may better take into account the nature and uses of intangible property, the interests at stake, and the appropriate measure of damages. On the other hand, if the law of conversion can be adapted to particular types of intangible property and will not displace other, more suitable law, it may be appropriate to do so. (Payne v. Elliot, supra, 54 Cal. at pp. 340–342.) 

In determining whether property that was taken is subject to a conversion claim, courts have recognized that “[p]roperty is a broad concept that includes ‘every intangible benefit and prerogative susceptible of possession or disposition.” (Kremen, at p. 1030; see CTC Real Estate Services v. Lepe (2006) 140 Cal.App.4th 856, 860 [44 Cal. Rptr. 3d 823] [one's personal identifying information “is a valuable asset, the misuse of which can have serious consequences to that person” and can be the object of theft].)

In A & M Records, Inc. v. Heilman (1977) 75 Cal.App.3d 554, 570 [142 Cal. Rptr. 390], the court said that the unauthorized recording and sale of recorded musical performances constituted a misappropriation of intangible property, which was a conversion. According to another court, the court in Heilman “implied conversion was a species of unfair competition.” (Lone Ranger Television, Inc. v. Program Radio Corp. (9th Cir. 1984) 740 F.2d 718, 725.) Thus, the tort of conversion has been adapted to new property rights and modern commercial transactions.

Attorney Steve® Tip:  As you can see, at least under California law, conversion can have wide application.  In boxing piracy cases, the fight distributors have the legal rights to the fight per contract with the promoters.  This is an intangible interest that could be said to be reflected by the contracts, the pricing sheets and other intangible rights.  Since there is legal authority on conversion in this regard (see below), the claim has to be taken seriously.  However, it is also important to understand what can at times be the limited nature of damages and remedies for a tort conversion claim.

Case on point

J & J Sports Prods. v. Concepcion (N.D.Cal. June 7, 2011, No. C 10-05092 WHA) 2011 U.S.Dist.LEXIS 60607, at *1.

Plaintiff J & J Sports Productions, Inc., is a California company, which owned the exclusive nationwide television distribution rights to "Firepower": Manny Pacquiao v. Miguel Cotto, WBO Welterweight Championship Fight Program, telecasted nationwide on November 14, 2009.  Defendants Victoria Estrella Concepcion and William Henry Concepcion are the owners and operators of Henry's commercial establishment in South San Francisco (Compl. ¶ 7). They did not enter into a subleasing agreement with plaintiff in order to broadcast the program. The interstate transmission of the program was encrypted and was only made available to  [*2] plaintiff's customers who had paid the licensing fees.  The Defendant let the case go to default judgment.

Plaintiff's complaint sought relief for conversion and violations of 47 U.S.C. 605, 553, and California Business and Professions Code 17200. 

In the application for default judgment, plaintiff claims conversion and violation of 47 U.S.C. 605 and 553, but in its memorandum  in support, by contrast, plaintiff only requests conversion damages and damages assessed under 47 U.S.C. 605, including costs and attorney's fees pursuant to that code section.

A conversion requires "ownership or right to possession of property, wrongful disposition of the property right and damages." G.S. Rasmussen & Assocs., Inc. v. Kalitta Flying Serv., Inc., 958 F.2d 896, 906 (9th Cir. 1992). 

A claim under Section 605 can be established when defendants engage in unlawful interception of "radio communication," whereas a Section 553 claim concerns interception "over a cable system." Section 605 allows for damages to be enhanced above conversion damages and costs and attorney's fees up to $110,000, while Section 553 allows for up to $60,000. 47 U.S.C. 605(e)(3)(C)(i-ii) and 553(c)(3)(A-B).

Reasonable attorney's fees shall be awarded under Section 605 and may be awarded under Section 553. 47 U.S.C. 605(e)(3)(B)(iii) and 553(c)(2)(C).

As plaintiff's factual allegations are taken as true, they support all three elements of a conversion claim. Plaintiff has purchased licensing rights to the program at issue. Given that the defendants' establishment had a capacity of 60 people, they would have been required to pay $2,200 for a subleasing agreement with plaintiff Gagliard. As defendants did not enter into an agreement and pay the fee, plaintiff is entitled to $2,200 in conversion damages. Accordingly, this order awards $2,200 for the conversion claim

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