     Case: 12-20603       Document: 00512252037          Page: 1     Date Filed: 05/23/2013




           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                    Fifth Circuit

                                                                             FILED
                                                                            May 23, 2013

                                     No. 12-20603                           Lyle W. Cayce
                                   Summary Calendar                              Clerk



JOE HAND PROMOTIONS, INC., as Broadcast Licensee of the November 21,
2009, UFC 106: Ortiz/Griffin II Event,

                                                   Plaintiff-Appellee
v.

CHIOS, INC., Individually and doing business as Ziti’s Italian Restaurant,
also known as Ziti’s Ristorante Italiano; JOHN N. PHILLIPOS, Individually
and doing business as Ziti’s Italian Restaurant, also known as Ziti’s
Ristorante Italiano, also known as John Phillips; NICKOLAS PHILLIPOS,
Individually and doing business as Ziti’s Italian Restaurant, also known as
Ziti’s Ristorante Italiano,

                                                   Defendants-Appellants



                    Appeal from the United States District Court
                         for the Southern District of Texas
                              USDC No. 4:11-CV-2411


Before JONES, DENNIS, and HAYNES, Circuit Judges.
PER CURIAM:*
       Plaintiff-appellant Joe Hand Promotions, Inc. is a marketer and licenser
of commercial closed circuit pay-per-view events. Defendants-appellants are


       *
        Pursuant to Fifth Circuit Rule 47.5, the court has determined that this opinion should
not be published and is not precedent except under the limited circumstances set forth in Fifth
Circuit Rule 47.5.4.
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                                  No. 12-20603

restaurateurs John Phillipos and Nickolas Phillipos and their company Chios,
Inc., through which the Phillipos owned and managed Ziti’s Italian Restaurant
in Friendswood, Texas. Appellee had obtained a license to sub-license the
closed-circuit telecast of the November 21, 2009 live pay-per-view mixed martial
arts event “Ultimate Fighting Championship 106.” In June 2011, appellee sued
appellants in federal district court, alleging that appellants violated the
Communications Act of 1934, as amended, 47 U.S.C. §§ 553 and 605, by
exhibiting the event at Ziti’s without purchasing from appellee the necessary
license.   Appellee sought statutory damages, an injunction against future
unauthorized exhibitions, costs, fees, and prejudgment interest. In their answer
to appellee’s complaint, appellants invoked the Fifth Amendment privilege
against self-incrimination, stating that “they refuse to give any information
regarding Plaintiff’s Original Complaint on the grounds that the allegations in
said complaint constitute a crime under 47 U.S.C. § 553.”
      The case proceeded to a bench trial on largely stipulated facts. Although
neither the Phillipos nor any other witnesses testified, the parties stipulated to
the affidavit of a private investigator who averred that he had observed an
advertisement for the screening of the fight on Ziti’s outdoor marquee and
witnessed the live exhibition of the event on televisions inside the restaurant.
The district court found that appellee “possessed the proprietary rights to exhibit
and sublicense the right to exhibit the closed-circuit telecast of the [event]” and
that appellants “willfully and for purposes of direct or indirect commercial
advantage or private financial gain intercepted and/or received the transmission
of the [e]vent” in violation of 47 U.S.C. § 605. The district court subsequently
entered judgment in favor of appellee and awarded statutory damages and
attorneys’ fees. We now affirm.
      First, appellants argue that the district court erred by drawing adverse
inferences from appellants’ invocation of the Fifth Amendment privilege in their

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                                   No. 12-20603

answer to the complaint. “In general, the decision as to whether to admit a
person’s invocation of the Fifth Amendment into evidence is committed to the
discretion of the district court.” Hinojosa v. Butler, 547 F.3d 285, 291 (5th Cir.
2008) (ellipsis in original) (quoting Baxter v. Palmigiano, 425 U.S. 308, 318
(1976)). “A trial court abuses its discretion when its ruling is based on an
erroneous view of the law or a clearly erroneous assessment of the evidence.” Id.
      Appellants acknowledge that “the Fifth Amendment does not forbid
adverse inferences against parties to civil actions when they refuse to testify in
response to probative evidence offered against them,” Baxter, 425 U.S. at 318
(emphasis added), but assert that here there was no evidence that the fight was
broadcast at Ziti’s without a license. This court has previously “accept[ed] the
proposition that a grant of summary judgment merely because of the invocation
of the fifth amendment would unduly penalize the employment of the privilege.”
United States v. White, 589 F.2d 1283, 1287 (5th Cir. 1979) (citing 8 C. Wright
& A. Miller, Fed. Prac. & Proc. § 2018, at 148 (1970)). Other courts interpreting
Baxter have followed suit. See Doe ex rel. Rudy-Glanzer v. Glanzer, 232 F.3d
1258, 1264 (9th Cir. 2000) (“[L]ower courts interpreting Baxter have been
uniform in suggesting that the key to the Baxter holding is that such adverse
inference can only be drawn when independent evidence exists of the fact to
which the party refuses to answer.” (citing LaSalle Bank Lake View v. Seguban,
54 F.3d 387, 390 (7th Cir. 1995), and Peiffer v. Lebanon Sch. Dist., 848 F.2d 44,
46 (3d Cir. 1988))); LaSalle Bank, 54 F.3d at 390-91 (“[T]he failure to answer the
allegations of a civil complaint based on an assertion of the Fifth Amendment
privilege could not be construed as an admission of those allegations . . . .” (citing
Nat’l Acceptance Co. v. Bathalter, 705 F.2d 924 (7th Cir. 1983))).
      Here, however, the private investigator’s affidavit, to which appellants
stipulated, provided probative evidence that Ziti’s advertized and televised the
fight. Moreover, appellants stipulated that they did not pay appellee the $925

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                                     No. 12-20603

licensing fee required to show the fight in a commercial establishment. “When
one party stipulates to a disputed fact, the stipulation conclusively proves that
fact.” United States v. Caldwell, 586 F.3d 338, 342 (5th Cir. 2009). Because
appellants stipulated to the facts as to which they now claim evidence was
lacking, they have failed to show that the district court abused its discretion to
the extent it drew adverse inferences based on their invocation of the Fifth
Amendment privilege.
      Second, appellants contend that the district court reversibly erred by
taking judicial notice of public records of the Texas state liquor board that
appellee submitted pursuant to Federal Rule of Evidence 201. Appellants argue
that appellee’s failure to indicate in its initial disclosure that it planned to move
the district court to take judicial notice of these records constitutes a violation
of Federal Rule of Civil Procedure 26. That rule provides in relevant part:
      [A] party must, without awaiting a discovery request, provide to the
      other parties . . . a copy — or a description by category and location
      — of all documents, electronically stored information, and tangible
      things that the disclosing party has in its possession, custody, or
      control and may use to support its claims or defenses, unless the use
      would be solely for impeachment[] . . . .
Fed. R. Civ. P. 26(a)(1)(A)(ii). Rule 37, in turn, provides that “[i]f a party fails
to provide information . . . as required by Rule 26(a) . . . , the party is not allowed
to use that information . . . to supply evidence on a motion, at a hearing, or at a
trial, unless the failure was substantially justified or is harmless.” Fed. R. Civ.
P. 37(c)(1).   The “basic purpose of [Rule 26 is to] prevent[] prejudice and
surprise.” Reed v. Iowa Marine & Repair Co., 16 F.3d 82, 85 (5th Cir. 1994); see
also Fielden v. CSX Transp., Inc., 482 F.3d 866, 871 (6th Cir. 2007) (“Rule 26(a)
generally serves to ‘allow[] both sides to prepare their cases adequately and
efficiently and to prevent the tactic of surprise from affecting the outcome of the
case.’” (alteration in original)).


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                                  No. 12-20603

      “We review for abuse of discretion a decision not to exclude documents
under rule 37.” Tex. A&M Research Found. v. Magna Transp., Inc., 338 F.3d
394, 402 (5th Cir. 2003). “In evaluating whether a violation of rule 26 is
harmless, and thus whether the district court was within its discretion in
allowing the evidence to be used at trial, we look to four factors: (1) the
importance of the evidence; (2) the prejudice to the opposing party of including
the evidence; (3) the possibility of curing such prejudice by granting a
continuance; and (4) the explanation for the party’s failure to disclose.” Id. “On
the other hand, when a defendant fails properly to object to the admission of
evidence, we review that admission solely for plain error.” Tompkins v. Cyr, 202
F.3d 770, 779 (5th Cir. 2000).
      As appellee notes, appellants did not object below to appellee’s submission
of the Ziti’s liquor license records for judicial notice. By failing to bring the
alleged Rule 26 disclosure violation to the district court’s attention, appellant’s
deprived the district court of an opportunity to consider whether to deny the
motion for judicial notice on that basis or impose some alternative sanction. See
Fed. R. Civ. P. 37(c)(1) (“In addition to or instead of [prohibiting the use of
undisclosed information], the court, on motion and after giving an opportunity
to be heard: (A) may order payment of the reasonable expenses, including
attorney's fees, caused by the failure; (B) may inform the jury of the party’s
failure; and (C) may impose other appropriate sanctions[] . . . .”). We thus review
this argument only for plain error. “There are four prerequisites to a finding
that the district court committed plain error in admitting specified evidence: (1)
an error; (2) that is clear and obvious under current law; (3) that affects the
defendant’s substantial rights; and (4) that would seriously affect the fairness,
integrity or public reputation of judicial proceedings if left uncorrected.”
Tompkins, 202 F.3d at 779.



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                                  No. 12-20603

      Assuming that appellees violated Rule 26, appellants have not
demonstrated plain error in the district court’s failure sua sponte to deny the
motion for judicial notice on that basis. Although the liquor license records were
not identified in appellee’s initial disclosure, appellants received notice of the
records when appellee filed its motion for judicial notice, to which appellants
failed to respond. Moreover, appellants do not assert that they were unaware
that public state agency records indicated that they held the liquor license for
Ziti’s. Accordingly, we conclude that appellants have failed to demonstrate that
actions of either appellees or the district court caused prejudicial surprise or
otherwise affected appellants’ substantial rights. See Ctr. for Bio. Diversity, Inc.
v. BP Am. Prod. Co., 704 F.3d 413, 424 (5th Cir. 2013); Tex. A&M Research
Found., 338 F.3d at 402; Reed, 16 F.3d at 85-86.
      The judgment of the district court is AFFIRMED.




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