Summary
awarding an additional $10,000 for a single violation against a small business
Summary of this case from Joe Hand Promotions, Inc. v. HetemiOpinion
05 Civ. 3411 (DC).
February 7, 2006
Wayne D. Lonstein, Esq., Julie Cohen Lonstein, Esq., LONSTEIN LAW OFFICE, P.C., Ellenville, NY, Attorneys for Plaintiff.
Marie Condoluci, Esq., LAW OFFICES OF HERIBERTO J. RODRIGUEZ, P.C., Bronx, NY, Attorneys for Defendants.
MEMORANDUM DECISION
On September 18, 2004, World Boxing Organization middleweight champion Oscar de la Hoya fought Bernard Hopkins, holder of the middleweight champion belts of the World Boxing Council, the World Boxing Association, and the International Boxing Federation, at the MGM Grand in Las Vegas, Nevada. Hopkins became the undisputed middleweight champion of the world when he knocked out de la Hoya in the ninth round.
The fight, which was arguably the most anticipated boxing match of the year, was beamed to televisions around the country via satellite and was available to cable and satellite subscribers for a fee. As will be described below, although typical residential cable or satellite subscribers could call their respective signal providers and order the fight for a fee that averaged around $60, the process was different for commercial establishments. To show the fight legally, such establishments were required to purchase the rights from a licensee of Top Rank, Inc. ("Top Rank"), the fight promoter. The fee depended on the size of the establishment, and could reach thousands of dollars.
Plaintiff Garden City Boxing Club, Inc. ("GCBC"), purchased from Top Rank the exclusive license to sell the fight to commercial establishments on the East Coast. GCBC brings this action under 47 U.S.C. §§ 553 605 ("Section 553" and "Section 605," respectively) against defendants Luis Polanco ("Polanco") and Luischia Restaurant Corp. ("Luischia") for cable piracy. GCBC alleges that Polanco, the owner and operator of Luischia, illegally intercepted or descrambled the signal for the fight and exhibited it in Luischia, without paying the license fee.
The case was tried to the Court on December 19, 2005. Judgment will be entered in favor of GCBC, to the extent set forth below. The following constitute my findings of fact and conclusions of law.
FINDINGS OF FACT
Prior to trial, the parties stipulated to the following facts: (1) GCBC had the exclusive right to license exhibition rights to the fight to commercial establishments; (2) Luischia was open for business on September 18, 2004, it had a television, and it had a cable connection provided by Cablevision NYC; (3) Polanco was an officer, director, shareholder, and/or principal of Luischia and had supervisory capacity and control over the activities occurring in Luischia; (4) on September 18, 2004, Polanco received a financial benefit from the operation of Luischia, and (5) Luischia did not purchase the right to exhibit the fight. The factual issues remaining to be decided, therefore, were (1) whether the fight was exhibited in Luischia on the night in question; (2) if so, whether the exhibition of the fight violated Section 553 and/or Section 605; and (3) if so, the amount of damages.
A. Pay-Per-View Rights and Cable Piracy
The television signal for the de la Hoya/Hopkins fight originated in Las Vegas and was beamed via satellite to various cable and satellite providers around the country. (Tr. 53:13-22). The fight was available to both residential and commercial cable and satellite customers for a fee, but the fee and the process for securing the right to exhibit the fight varied dramatically depending on whether one was a residential or commercial customer. (Id. at 29). A residential customer could order the fight only a short time before it actually aired for a fee that was around $50 or $60. (Id. at 46).
References to "Tr." are to the transcript of the December 19, 2005, trial.
The process was different for commercial establishments that wished to purchase commercial exhibition rights. GCBC hired a company called Joe Hand Promotions ("Joe Hand") as its agent to sell its commercial exhibition rights to commercial establishments in and around New York City and elsewhere. (Id. at 30). A commercial establishment that wished to purchase the right to exhibit the fight was required to contact Joe Hand and pay it a fee in advance. (Id. at 36). The fee was determined by multiplying the maximum occupancy of the establishment (as listed on its certificate of occupancy) by the established rate per person for the particular fight. (Id. at 41). This fee would vary depending on the fight, but for the de la Hoya/Hopkins fight it could have been as much as $2,000 for an establishment the size of Luischia. (Id. at 41-42).
Once the fee had been paid, the next step depended on whether the establishment was a satellite customer or a cable customer, although approximately 99% of establishments that ordered the fight were satellite customers. (Id. at 36). For a satellite customer, Joe Hand would contact GCBC to inform it that the fee had been paid, and GCBC would contact the satellite company (such as DirecTV) and inform it that the establishment was authorized to receive the event. (Id.). For a cable customer, the local cable company would usually have to send a truck to the establishment to physically remove a block on the cable, thus enabling the establishment to receive the signal. (Id. at 36-37).
An establishment can illegally acquire the signal for a pay-per-view event in several ways. One common way is for a commercial establishment to use a satellite dish or cable connection that is registered as a residential account, rather than a commercial one. (Id. at 45-46). Another method is through the use of an illegal "black box," which is a device available on the Internet and other sources that is capable of descrambling pay-per-view events. (Id. at 46-47). Yet another method is for a commercial establishment to splice the cable of an adjacent residential establishment that legitimately orders the event through a valid residential account. (Id. at 47). This would involve running a cable from one building to another, or from an apartment to a commercial establishment in the same building. (Id.).
Because of the significant cost involved in legally acquiring commercial exhibition rights, commercial establishments typically (but are not required to) charge a "cover" — an admission price to enter the establishment and watch the fight. (Id. at 39-40). If an establishment advertises that it is going to show a particular event and is not charging a cover, that is an indication that the establishment may be receiving the signal illegally. (Id.).
B. The Investigation
Shortly before the fight, GCBC and Joe Hand collaborated to generate a list of establishments that had paid for the commercial rights to the fight. (Id. at 43-44). GCBC, in turn, hired private investigators to travel around designated areas of the city on the night of the fight, looking for establishments that were exhibiting it without having paid for it. (Id. at 6). Each investigator was given a list of establishments that had paid, so as to enable them to identify the unauthorized establishments. (Id.).
Timothy Gansrow was one such private investigator. Gansrow has been a New York City police officer for approximately thirteen years. (Id. at 5:4-15). On September 18, 2004, he was a detective, and had been authorized by the police department to engage in off-duty work, including investigations of pay-per-view events for private entities such as GCBC. (Id. at 5-6). On September 18, 2004, Gansrow was in the Bronx, looking for commercial establishments that were exhibiting the fight but that had not paid for the rights to do so. (Id. at 9-10). Gansrow's goal, if he found such an establishment, was to "provide as much investigative documentation as [he] could to in fact show that this establishment . . . was showing this event." (Id. at 9:5-7). The pay-per-view broadcast of the fight started at 9:00 p.m. eastern time. (Id. at 25:5-10).
Shortly before ten that evening, Gansrow noticed that Luischia was exhibiting posters in its windows advertising that it would be showing the fight that evening. (Id. at 10:18-21). He consulted the list of establishments that had ordered the fight legally and determined that Luischia was not on it. (Id. at 10:9-14). Gansrow entered the restaurant under the guise of purchasing food and, after having a brief conversation with a woman at the counter, looked at the television, which was in the right-hand corner of the bar as he walked in. (Id. at 10-11; 14:2-6). He saw Oscar de la Hoya "engaged in a conversation on that television with an unknown black male wearing a jacket." (Id. at 11:6-7). Gansrow ascertained that this was part of the pay-per-view broadcast, took a menu to prove that he had entered the restaurant, and then left. (Id. at 11-12). He was in the establishment for approximately five minutes, and there were approximately fifteen other patrons in the restaurant. (Id. at 11:16-17; 14:20-22). Gansrow did not see a cable box or a satellite dish. (Id. at 14).
Gansrow typed an affidavit shortly after leaving Luischia that stated that he entered the establishment at 9:59 p.m. and left at 9:35 p.m. (Pl. Ex. 1). On direct, Gansrow sought to rectify this obvious impossibility by testifying that he must have arrived at 9:30 p.m. and left at 9:35 p.m., and inadvertently typed 9:59 p.m. as his arrival time. (Tr. at 16). On redirect, after having viewed the portion of the tape that aired at approximately 9:59 p.m., Gansrow revised his testimony, affirmed that the portion of the tape that aired at 9:59 p.m. was what he had seen that night, and testified that he must have arrived at 9:59 p.m. and left shortly thereafter, and inadvertently typed his departure time as 9:35 p.m. (Id. at 25-27). The Court accepts the testimony that Gansrow arrived at 9:59 p.m. and left shortly thereafter.
Polanco admitted that he put up posters advertising that the fight would be shown in Luischia, but testified that he realized shortly before the fight was to start that he could not order it, and consequently the fight was not shown. (Tr. 65:18-24). This testimony makes no sense and is rejected, for if Polanco were telling the truth, he surely knew by 9:00 p.m. that he could not order the fight and presumably he would have taken the posters down rather than mislead customers. Yet, the posters were still up when Gansrow entered Luischia shortly before 10:00 p.m.
Gansrow testified that he knew it was a pay-per-view broadcast in part because a pay-per-view logo was displayed in the corner of the screen. (Tr. 26-27). In fact, a review of a tape of the fight reveals that no such logo was displayed on the screen during this portion of the broadcast. Several broadcasters, however, can be seen holding microphones that prominently display a logo consisting of the words "HBO PPV."
A recording of the fight indicates that at approximately fifty-nine minutes into the broadcast (which would have been on the television at approximately 9:59 p.m. on the evening in question, because the broadcast started at 9 p.m.), Oscar de la Hoya was on the screen engaged in a conversation with the referee, who was an African-American male. (Def. Ex. 1).
Accordingly, I find, by a preponderance of the evidence, that (1) the de la Hoya/Hopkins fight was exhibited in Luischia on September 18, 2004, and (2) defendants either used a "black box" to descramble the signal or spliced the cable from a residential account.
There is nothing in either Section 553 or Section 605 to suggest an intent to depart from the preponderance-of-the-evidence standard applicable to civil litigation. See, e.g., Back v. Hastings on Hudson Union Free School Dist., 365 F.3d 107, 123 (2d Cir. 2004) (explaining that preponderance-of-evidence standard is generally applicable in civil cases).
At trial, the defense had eight witnesses on call, apparently ready to testify. None was called. Rather, the parties stipulated that, had they been called, they would have testified that (1) they were in Luischia on the night in question, and (2) they did not see the de la Hoya/Hopkins fight on the television screen. (Tr. 86). In light of Gansrow's testimony, and particularly the fact that his affidavit and trial testimony closely match the videotape of the fight, I accept his testimony that the fight was playing on the television screen when he entered the bar. To the extent Polanco and his wife testified to the contrary, I reject their testimony as not credible.
DISCUSSION
I discuss subject matter jurisdiction, liability, and damages in turn.A. Subject Matter Jurisdiction
This Court has subject matter jurisdiction over this case because it arises under the laws of the United States, specifically 47 U.S.C. §§ 553 605. See 28 U.S.C. § 1331.
B. Liability 1. Applicable Law
Sections 553 and 605 prohibit similar conduct but provide for a different range of penalties.
Section 553 provides 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. § 553(a)(1). Section 605 provides that "[n]o person not being entitled thereto shall receive or assist in receiving any interstate or foreign communication by radio and use such communication (or any information therein contained) for his own benefit or for the benefit of another not entitled thereto." 47 U.S.C. § 605(a). Section 605 has been interpreted to apply to the interception of satellite communications. See Int'l Cablevision, Inc. v. Sykes, 75 F.3d 123, 133 (2d Cir. 1996) ("Section 605 not only prohibits unauthorized interception of traditional radio communications, but also communications transmitted by means of new technologies. For example, existing section 605 provides protection against the unauthorized reception of . . . satellite communications. This amendment . . . is intended to preserve this broad reach.") (quoting 130 Cong. Rec. S130, reprinted in 1984 U.S.C.C.A.N. 4746); see also Garden City Boxing Club, Inc. v. Guzman, No. 03 Civ. 8776, 2005 WL 1153728, at *2 (S.D.N.Y. Apr. 26, 2005) ("[W]hen the transmission involves a radio or satellite signal, section 605 is appropriately applied, whether the defendant intercepts that signal directly or indirectly.") (citations omitted).
The primary differences between Section 553 and Section 605 are (1) the range of statutory damages available to an aggrieved party, and (2) the respective provisions for attorneys' fees. Section 553 provides for statutory damages "of not less than $250 or more than $10,000," but allows the Court to increase the amount of damages by up to $50,000 if the violation "was committed willfully and for purposes of commercial advantage or private financial gain." 47 U.S.C. § 553(c)(3)(A)(ii) (c)(3)(B). Section 605 provides for statutory damages of "not less than $1,000 or more than $10,000" for violations of the relevant provision, and further provides that the Court may award an amount of "not more than $100,000" in any case "in which the court finds that the violation was committed willfully and for purposes of direct or indirect commercial advantage or private financial gain." 47 U.S.C. § 605(e)(3)(C)(i)(II) (e)(3)(C)(ii). Both statutes provide for lower minimum damages ($100 and $250, respectively) in the event the Court finds that the violator "was not aware and had no reason to believe that his acts" violated the respective statute. 47 U.S.C. § 553(c)(3)(C); 47 U.S.C. § 605(e)(3)(C)(iii). Finally, under Section 553 the Court "may" award costs, including attorneys' fees, whereas under Section 605 the award of costs and attorneys' fees is mandatory. 47 U.S.C. § 553(c)(2)(c); 47 U.S.C. § 605(e)(3)(B)(iii).
2. Application
Because I have found that the fight was a satellite transmission offered over a cable system, and that the defendants received and/or intercepted the signal for the fight without being entitled to do so, the defendants' conduct violated both Sections 553 and 605. I now turn to the issue of damages.
C. Damages
If a defendant has violated both Section 553 and Section 605, the Court should award damages only under Section 605. See Int'l Cablevision, Inc. v. Sykes, 997 F.2d 998, 1009 (2d Cir. 1993) ("If [Section 605] was violated and [the plaintiff] was aggrieved thereby, the court should grant [the plaintiff's] request for damages under § 605(e) instead of granting the lesser damages under § 553."). I therefore consider GCBC's claim for damages under Section 605.
First, I conclude that defendants were either aware that their actions violated Section 605, or had reason to believe that they did. I further conclude that the statute was violated willfully and "for purposes of direct or indirect commercial advantage." I therefore am bound under the statute to grant an award of somewhere between $1,000 and $110,000, "as the Court considers just." 47 U.S.C. § 605(e)(3)(C)(i)(II).
Section 605(e)(3)(C)(i)(II) provides for damages between $1,000 and $10,000 for each violation. Section 605(e)(3)(C)(ii) allows the Court in its discretion to "increase the award of damages . . . by an amount of not more than $100,000 for each violation" if the violation was willful and for purposes of commercial advantage. Thus, the maximum possible recovery under the statute is $110,000 per violation.
Some courts considering similar facts have imposed damages based on a fixed amount per patron. See, e.g., Garden City Boxing Club, Inc. v. Salcedo, No. 04 Civ. 5027, 2005 WL 2898233 (S.D.N.Y. Nov. 3, 2005) ($300.00 per patron); Time Warner Cable of New York City v. Googies Luncheonette, Inc., 77 F. Supp. 2d 485 (S.D.N.Y. 1999) ($50.00 per patron). Others have awarded a flat sum. See, e.g., Garden City Boxing Club, Inc. v. Guzman, No. 03 Civ. 8776, 2005 WL 1153728 (S.D.N.Y. Apr. 26, 2005) ($5,000.00); Kingvision Pay-Per-View, Ltd. v. New Paradise Rest., No. 99 Civ. 10020, 2000 WL 378053 (S.D.N.Y. Apr. 11, 2000) ($20,000). On motions for entry of default in cases involving this plaintiff and this fight, I have awarded statutory damages of $5,000.00 for a violation of Section 605(e)(3)(C)(i)(II) and an additional $5,000.00 for violations that were willful and for commercial gain. See, e.g., Garden City Boxing Club v. Rosa, No. 05 Civ. 6233 (DC); Garden City Boxing Club v. Ruiz, 05 Civ. 3408 (DC).
Here, the commercial rights for the de la Hoya/Hopkins fight would have cost Luischia approximately $2,000.00. In addition, I find that, more likely that not, one of the reasons defendants exhibited the fight was to realize increased profits from the sale of food and beverages, which profits should be disgorged. Finally, plaintiff is entitled to an enhancement of damages due to my finding that defendants' conduct was willful and for commercial gain, although I am mindful that defendants run a small business, their profit from exhibition of the flight was likely minimal, and, although the amount of damages should be an adequate deterrent, the violation is not so serious as to warrant putting the restaurant out of business. Accordingly, I find that an award of an additional $10,000.00 (for a total of $12,000.00) is fair and just, in light of all of the circumstances.
CONCLUSION
For the foregoing reasons, judgment shall be entered in favor of GCBC and against defendants, jointly and severally, in the amount of $12,000.00, plus costs and attorneys' fees. In addition, pursuant to 47 U.S.C. § 605(e)(3)(B)(i), defendants are permanently enjoined from further violations of Section 605. The Clerk of the Court shall enter judgment accordingly.
SO ORDERED.