Opinion
99 Civ. 9656 (VM)(FM).
November 24, 2000.
REPORT AND RECOMMENDATION TO THE HONORABLE VICTOR MARRERO
INTRODUCTION
In this action, Cablevision Systems New York City Corporation ("Cablevision") alleges that defendants La Palma Meat Market ("La Palma") and Marianella Tejeda ("Tejeda") (collectively, "Defendants") illegally intercepted cable television programming signals, in violation of the Cable Communications Policy Act ("Communications Act"), as amended, 47 U.S.C. § 553(a)(1) and 605(a), and Section 225.6 of New York State Public Service Law.
On December 6, 1999, following the Defendants' failure to answer or otherwise respond to the complaint, the Honorable Lewis A. Kaplan ordered that a default judgment be entered against the Defendants. Thereafter, Judge Kaplan referred the matter to me to conduct an inquest regarding damages, if any, to be awarded to Cablevision. The case subsequently was reassigned to you.
By order dated December 22, 1999, I directed Cablevision to serve and file an inquest memorandum by February 1, 2000, setting forth its proof of damages, as well as proposed findings of fact and conclusions of law. The Defendants were directed to serve and file any opposing papers on or before March 1, 2000. Thereafter, by memorandum endorsement dated January 20, 2000, I extended Cablevision's time to March 17, 2000 and ordered the Defendants to file their papers by April 17, 2000. Although Cablevision complied with my order, the Defendants never filed any opposing papers.
As the Second Circuit has indicated, an inquest may be held on the basis of documentary evidence, "'as long as [the Court has] ensured that there was a basis for the damages specified in the default judgement.'" Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 111 (2d Cir. 1997) (quoting Fustok v. ContiCommodity Services, Inc., 873 F.2d 38, 40 (2d Cir. 1989).
In its inquest papers, Cablevision seeks to recover maximum statutory damages in the amount of $10,000 from each defendant, plus an additional award of as much as $100,000 because the Defendants' interception allegedly was committed for purposes of commercial advantage or private financial gain, $2,862.00 in attorneys' fees, $255.00 in costs, and such punitive damages as the Court considers just and appropriate.
For the reasons set forth below, I recommend that Cablevision be awarded judgment against each of the Defendants in the amount of $6,630.60, consisting of statutory damages in the amount of $3,513.60, attorneys' fees in the amount of $2,862.00, and $255.00 in costs
BACKGROUND
In light of the Defendants' default, Cablevision's properly-pleaded allegations, except those relating to damages, must be accepted as true. See Cotton v. Slone, 4 F.3d 176, 181 (2d Cir. 1993); Greyhound Exhibit group, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992); Time Warner Cable of New York City v. Barnes, 13 F. Supp.2d 543, 547 (S.D.N Y 1998); Cablevision Systems New York City Corp. v. Lokshin, 980 F. Supp. 107, 111 (E.D.N Y 1997). My findings of fact and conclusions of law, based upon the allegations of the complaint and Cablevision's inquest papers, are as follows:
Cablevision is a corporation organized and existing under the laws of the State of Delaware. It is duly registered to do business in New York State and has its principal business offices at One Media Crossways, Woodbury, New York. (Compl. ¶ 4). Defendant Tejeda resides at 25 Manhattan Place, Cliffside, New Jersey, and is the proprietor of defendant La Palma located at 759 Gerard Avenue, Bronx, New York. (Id. ¶¶ 5, 6).
Pursuant to certain franchises, Cablevision constructs, operates, and maintains cable television systems in two counties of New York City. (Id. ¶ 8). Cablevision offers cable television services to subscribers who request and pay for them. (Id. ¶ 9). Cablevision's services consist of various programming packages. The "Basic" service package provides enhanced quality reception of broadcast stations as well as a small number of additional programming services at a monthly rate. (See Aff. of Charles Carroll, sworn to on March 2, 2000 ("Carroll Aff."), ¶ 3).
Cablevision's residential subscribers may also elect to subscribe to one or more premium channels such as Cinemax, Home Box Office, or Showtime, for an additional monthly charge per service, and may elect to order, on a pay-per-view basis, programming services which include movies and sporting events. (Carroll Aff. ¶¶ 3-4). The cost of these premium services ranges from $7.00 to $13.00 per month per service. (Id. ¶ 12). The pay-per-view service includes selections which typically range in price from approximately $1.95 to approximately $54.95 per selection. The pay-per-view service is offered continuously over a 24-hour period. (Id. ¶ 12). The aggregate value of each pay-per-view event offered over a typical month, assuming each is viewed once, is hundreds of dollars. (Id.).
In addition to Basic service, Cablevision customers may also subscribe to an "Optimum" package, at a monthly rate of approximately $71.95, to receive all of the Cablevision programming services included in the Basic service package, plus all of Cablevision's premium services, but not its pay-per-view programming services. (Carroll Aff., ¶ 25).
Cablevision receives signals for nearly all of its services from satellites. (Compl. ¶ 12). The signals for all of Cablevision's cable and television services are transmitted to subscribers' homes through a network of cable wiring and equipment (the "System"). (Id.). Each subscriber is entitled to receive only the level and amount of programming that the subscriber has selected and purchased. (Id. ¶ 13).
To prevent subscribers from receiving programming services for which they have not paid, Cablevision encodes or "scrambles" the signals for its services. (Compl. ¶ 13). Subscribers are provided with converter-decoder boxes programmed to authorize viewing of Cablevision services purchased by those subscribers. (Id. ¶ 14). These converter-decoder boxes decode the scrambled Cablevision services. (Id. ¶ 16). Programming services not purchased remain scrambled and are not viewable on a subscriber's television set. (Id. ¶ 15).
Despite this scrambling technology, it is possible for an individual to install an unauthorized converter-decoder which permits Cablevision signals to be illegally intercepted and descrambled free of charge. (Id. ¶ 16).
The Defendants engaged in the unauthorized reception and interception of Cablevision's cable television programming services by their ongoing use of a "pirate" modified cable television descrambling and decoding device. (Id. ¶ 20). On January 28, 1999, during a routine audit, a Cablevision technician observed the possible use of such a decoder inside La Palma. (See Carroll Aff. ¶ 16). Neither Tejeda, nor La Palma were ever subscribers to Cablevision's cable television service in Bronx, New York, authorized to receive Cablevision's cable television programming services. (See id. ¶ 20). The device permitted the Defendants to view Cablevision's premium and pay-per-view programming services without authorization. (Id. ¶¶ 11-12; see also Compl. ¶¶ 13-15). Their illegal connection to Cablevision's System was severed on the day of the audit, and Tejeda was arrested. (Affidavit of William B. Jung, Esq., sworn to on Mar. 9, 2000 ("Jung Aff."), ¶ 5).
The Defendants knew that their use of an unauthorized converter-decoder would allow them to circumvent the security features of Cablevision's System, to descramble all of Cablevision's premium, pay-per-view and other scrambled programming, and to gain access to Cablevision's programming services without paying for such services. (Compl. ¶ 16). Indeed, unauthorized converter-decoders serve no lawful purpose on a cable system. Their sole function is to enable their users to receive unauthorized cable television programming without having to pay for the service. (Carroll Aff. ¶ 13).
DISCUSSION
Statutory Damages
Sections 553 and 605 of Title 47 of the United States Code prohibit the unauthorized interception and reception of cable programming services. Barnes, 13 F. Supp.2d at 547-48 (citing International Cablevision, Inc. v. Sykes, 75 F.3d 123, 133 (2d Cir. 1996)); Lokshin, 980 F. Supp. at 112 ("In contrast to section 553, which by its statutory language applies only to transmissions via cable systems, section 605(a) applies to 'the interception of cable-borne, as well as over-the-air, pay television' where cable-borne transmissions originate as satellite transmissions. . . . Thus, when pay television programming is transmitted over both cable and satellite mediums, both statutes apply. . . ." (quoting Sykes, 75 F.3d at 130)).
47 U.S.C. § 553(a) provides, in pertinent part, that:
No person shall intercept or receive . . . any communications service offered over a cable system, unless specifically authorized to do so by a cable operator or as may otherwise be specifically authorized by law.
47 U.S.C. § 605 provides, inter alia, that:
No person not being authorized by the sender shall intercept any radio communication and divulge or publish the . . . contents . . . of such intercepted communication to any person.
When a court determines that a defendant's conduct has violated both sections 553 and 605 of the Communications Act, a plaintiff may recover damages under one of those sections only. Sykes, 75 F.3d at 127; Barnes, 13 F. Supp.2d at 548; American Cablevision of Queens v. McGinn, 817 F. Supp. 317, 320 (E.D.N.Y. 1993). An aggrieved cable operator may, however, elect to recover damages under Section 605 in consideration of its higher damages award. Barnes, 13 F. Supp.2d at 548.
Cablevision's submissions establish that Tejeda installed in her place of business an unauthorized converter-decoder that enabled the Defendants to descramble all of Cablevision's encrypted premium and pay-per-view cable television signals. (See Carroll Aff. ¶¶ 11-12; see Compl. ¶¶ 13-15). The Defendants therefore violated 47 U.S.C. § 553 and 605. Moreover, Cablevision possesses "proprietary rights" in the communications that the Defendants intercepted without authorization and, therefore, is a "person aggrieved" within the meaning of 47 U.S.C. § 553 (c)(1) and 605(e)(3)(A).
Cablevision has elected to recover damages under Section 605 which provides that a court may award an aggrieved party a statutory damage award of "not less than $1,000 or more than $10,000, as the court considers just." 47 U.S.C. § 605(e)(3)(C)(i)(II). Not surprisingly, Cablevision seeks to recover the maximum statutory damages allowable — $10,000 per defendant — in addition to its attorneys' fees and costs. Pursuant to 47 U.S.C. § 605(e)(3)(C)(ii), Cablevision also seeks to recover an additional maximum of $100,000 on the theory that the Defendants acted "willfully and for purposes of direct or indirect commercial advantage or private financial gain."
Although the statute provides little guidance on how damages should be assessed, some courts have calculated statutory damages based upon the monthly value of the defendant's unauthorized cable reception. See Lokshin, 980 F. Supp. at 113 (finding award of $125.00 per month for pilfered pay-per-view services to be reasonable); McGinn, 817 F. Supp. at 320 (imposing statutory damages of $250.00 per month per unauthorized decoder); Time Warner Cable of New York v. Rivera, No. 94 Civ. 2339, 1995 WL 362429, at *4 (E.D.N.Y. June 8, 1995) (Gold, Mag. J.) (recommending approximately $1,000.00 in damages for eight months of pay-per-view usage). Other courts have simply imposed damages in a flat amount without explanation. See, e.g. Barnes, 13 F. Supp.2d at 548 ($1,000.00).
Here, although the Defendants' default has precluded any discovery as to the actual duration of their illegal interception, it is reasonable to assume that the Defendants improperly obtained Cablevision "Basic" and premium services for at least 12 months, for which they otherwise would have had to pay $71.95 per month, or a total of $863.40 per year. Furthermore, although it is unlikely that the Defendants would have availed themselves of every pay-per-view event each time it was shown, it is similarly reasonable to assume that they would have watched at least ten minimum-cost events per month, plus one maximum-cost event. This would have resulted in an additional monthly loss to Cablevision of $74.45 ($1.95 x 10 + $54.95), or $893.40 for the year. On the assumption that Cablevision services were stolen to this approximate extent, the Defendants would be liable for actual damages in the amount of $1756.80 ($863.40 + $893.40).
As Magistrate Judge Ellis noted in TWCNYC v. Domsky, No. 96 Civ. 6851, 1997 U.S. Dist. LEXIS 13505, at *18 (Sept. 2, 1997), awarding damages simply for the value of the services stolen by the Defendants "would not be sufficient deterrence" since the penalty would merely be "the amount that should have been paid." Accordingly, it is appropriate to double the monthly damages for each month that the Defendants were using an illegal decoder. (Id.). This would result in an award of statutory damages in the amount of $3513.60.
Finally, although the illegal decoder was found at a commercial establishment, Cablevision has not furnished any evidence that it was being used as part of LaPalma's business, rather than in a back office in a manner akin to the use of such a device at a private residence. This consequently is not a case in which Cablevision has made a showing that the Defendants were using the device under circumstances which would warrant an additional statutory award under 47 U.S.C. § 605(e)(3)(C)(ii).
Having concluded that Cablevision is entitled to relief on its first cause of action and having recommended an award which fully compensates Cablevision, the New York State Public Service Law claim need not be addressed. Rivera, 1995 WL 362429, at *5 n. 2; see also, Barnes, 13 F. Supp.2d at 548-49.
Attorneys' Fees
Cablevision also alleges that it incurred attorneys' fees and costs in the amount of $2,862.00, in the course of prosecuting this action. (See Jung Aff. ¶ 12).
Section 605 authorizes a court to "direct the recovery of full costs, including the award of reasonable attorneys' fees to an aggrieved party who prevails." 47 U.S.C. § 605(e)(3)(B)(iii). When fixing a reasonable rate for attorneys' fees, courts may consider and apply prevailing market rates "for similar services by lawyers of reasonably comparable skill, experience, and reputation." Gierlinger v. Gleason, 160 F.3d 858, 882 (2d Cir. 1998) (quoting Blum v. Stenson, 465 U.S. 886, 895 n. 11 (1984)). Moreover, a court may rely on its own knowledge of private firm hourly rates in estimating reasonable attorneys' fees. Miele v. New York State Teamsters Conference Pension Retirement Fund, 831 F.2d 407, 409 (2d Cir. 1987).
In the Second Circuit, a party seeking an award of attorney fees must support that request with contemporaneous time records that show, "for each attorney, the date, the hours expended, and the nature of the work done." New York State Ass'n for Retarded Children, Inc. v. Carey, 711 F.2d 1136, 1154 (2d Cir. 1983). Attorney fee applications that do not contain such supporting data "should normally be disallowed." Id. at 1154.
In prosecuting this action against the Defendants, Cablevision engaged the services of the law firm of Daniel J. Lefkowitz, P.C. On its behalf, attorney William B. Jung, Esq., has submitted an affidavit to the Court setting forth: (a) the names of the attorneys and paralegals who worked on this matter; (b) the professional experience of those persons; (c) the number of hours each devoted to this action and the nature of the work they performed; and (d) the hourly rate at which each was compensated.
The record establishes that personnel at the law firm expended the following number of hours prosecuting this action against the Defendants at the following hourly rate(s) of compensation:
Timekeeper Total Hours Hourly Rate Total
Daniel J. Lefkowitz, Esq. 1.20 $190 $228.00 William B. Jung, Esq. 3.60 165 594.00 Shaun K. Hogan, Esq. 0.20 165 33.00 Anthony J. Danzi, Esq. 3.00 160 480.00 Jennifer L. Plotez, Law Graduate 2.90 125 362.50 Stephanie A. Korchinski, Paralegal 13.30 85 1,147.50 Alfonso N. Cava, Paralegal 0.20 85 17.00
Total $2,862.00
Based upon my review, these hours and billing rates seem reasonable. I therefore recommend that Cablevision be awarded attorneys' fees in the amount of $2,862.00.
Costs
Cablevision also seeks to recover $255.00 in costs, consisting of $35.00 incurred in the course of serving La Palma, $70.00 incurred in serving Tejeda, and filing fees in the amount of $150.00. Cablevision's request for costs totaling $255.00 is therefore reasonable and should be granted.
CONCLUSION
For the reasons set forth above, I recommend that Cablevision be awarded damages, including attorneys' fees and the costs incurred in prosecuting this action, in the amount of $6,630.60, against each of the Defendants.
NOTICE OF PROCEDURE FOR FILING OF OBJECTIONS TO THIS REPORT AND RECOMMENDATION
The parties are hereby directed that if they have any objections to this Report and Recommendation, they must, within ten (10) days from today, make them in writing, file them with the Clerk of the Court, and send copies to the chambers of the Honorable Victor Marerro, United States District Judge, at the United States Courthouse, 40 Centre Street, New York, N.Y. 10007, to the chambers of the undersigned, at the United States Courthouse, 500 Pearl Street, New York, N.Y. 10007, and to any opposing parties. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), 6(e), 72(b). Any requests for an extension of time for filing objections must be directed to Judge Marerro. Any failure to file timely objections will result in a waiver of those objections for purposes of appeal. See Thomas v. Arn, 474 U.S. 140, 106 S.Ct. 466, 88 L.Ed.2d 435 (1985); 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), 6(e), 72(b).