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recommending that the Court decline to award pre-judgment interest, on similar facts, because "plaintiff [would] be more than fully compensated for its lost licensing fees and any interest it could have earned on such fees" by virtue of the damages otherwise awarded by the court
Summary of this case from J&J Sports Prods., Inc. v. Fantasy Bar & Rest. Corp.Opinion
02 Civ. 6673 (GBD) (DF)
April 28, 2004
REPORT AND RECOMMENDATION
INTRODUCTION
On August 21, 2002, plaintiff Garden City Boxing Club, Inc. ("Garden City" or "Plaintiff) filed a Complaint with this Court, alleging violations of the Communications Act of 1934, 47 U.S.C. § 605 (1996), by a number of defendants, including Olimpus Restaurant Inc., d/b/a Olympus Restaurant ("Olympus") and Maria Argentina Concepcion ("Concepcion"), individually, and as officer, director, shareholder and/or principal of Olympus. (Dkt. 1.) Unlike the other named defendants in the case, Olympus and Concepcion have not appeared, answered, or otherwise moved with respect to the Complaint. The other named defendants are currently in litigation or have settled with Plaintiff. ( See Dkt.)
On December 30, 2002, this Court (Daniels, J.) granted a default judgment against Olympus and Concepcion ( see Dkt. 16), and referred the matter to me to conduct an inquest and to report and recommend concerning Garden City's damages. For the reasons that follow, I recommend that Garden City be awarded damages plus costs, as calculated below, on the default judgment against these defendants.
BACKGROUND
As alleged in Garden City's Complaint ("Compl."), and supported by the documentation submitted by Garden City in support of its Proposed Findings of Fact and Conclusions of Law ("Proposed Findings"), the relevant facts are as follows:
Garden City is a California corporation with its principal place of business located at 2380 South Bascom Avenue, Suite 200, Campbell, CA 95008. ( See Compl. ¶ 5.) Defendant Olympus is a business with principal place of business located at 84-86 Nagle Avenue, New York, N.Y. 10040. ( See id. ¶ 12.) Defendant Concepcion, an alleged operator of Olympus, is a resident of New York ( See id. ¶ 11; Proposed Findings at 1.)
On June 8, 2002, boxers Lennox Lewis and Mike Tyson were scheduled to appear in a prizefight. ( See Compl. ¶ 33.) Garden City obtained the right to distribute the Lewis/Tyson fight live to establishments in New York that wished to exhibit the fight publicly to their patrons. ( See id. ¶ 34.) Garden City then hired independent investigators to identify establishments that exhibited the fight without first securing from Garden City the right to do so. ( See Affidavit of Joseph Gagliardi, sworn to Oct. 17, 2002 ("Gagliardi Aff."), ¶ 7.)
One such investigator, Timothy Rielly ("Rielly"), visited Olympus at approximately 11:55 p.m. on the night of the fight. ( See Affidavit of Timothy Rielly, sworn to June 13, 2002 ("Rielly Aff."), ¶ 1.) Rielly entered Olympus without paying any entrance fee ( see id.), joining approximately 60 people in the establishment. ( See id. ¶ 3.) Upon entering Olympus, Rielly saw, over the bar, a 32-inch television set, on which the boxing match was being shown. ( See id. ¶ 1.) According to Garden City, however, it had never received a payment from Olympus to secure broadcast rights to the match, and it had never given Olympus authorization to exhibit the match. ( See Compl. ¶ 36.)
On August 21, 2002, having discovered Olympus's unauthorized use of the fight broadcast, Garden City filed this action, alleging that, by exhibiting the broadcast without permission, Olympus and Concepcion had violated the Communications Act of 1934. ( See id. ¶ 39.) These defendants failed to respond to the Complaint, and, as noted above, a default judgment was entered against them. ( See Dkt. 16.) Thereafter, Judge Daniels referred the matter to me for the purpose of conducting an inquest concerning Garden City's alleged damages. To date, neither Olympus nor Concepcion has responded to Garden City's submissions with respect to its claimed damages, nor have these defendants requested a hearing with respect to damages. I therefore issue this report and recommendation based solely on Garden City's submissions.
DISCUSSION
In its Proposed Findings, Garden City has requested an award of $110,000 against Olympus and Concepcion, plus interest at 9% per annum from the date of the alleged violation. Garden City has further requested reimbursement for legal and investigative costs totaling $241.14 from Olympus and $194.14 from Concepcion. ( See Affidavit of Julie Cohen Lonstein, sworn to Nov. 12, 2002 ("Lonstein Aff."), ¶ 30.) Without a response from the defendants as to the damages issue, this Court must assess whether Garden City has sufficiently demonstrated that it is entitled to the amounts in question.
Although "a default judgment entered on well-pleaded allegations in a complaint establishes defendant's liability," it does not reach the issue of damages. Bambu Sales, Inc. v. Ozak Trading, Inc., 58 F.3d 849, 854 (2d Cir. 1995) (quoting Trans World Airlines, Inc. v. Hughes, 449 F.2d 51, 69 (2d Cir. 1971), rev'd on other grounds, 409 U.S. 363 (1973)). A plaintiff must therefore substantiate a claim with evidence to prove the extent of damages. See Trehan v. Von Tarkanyi, 63 B.R. 1001, 1008 n. 12 (S.D.N.Y. 1986) (plaintiff must introduce evidence to prove damages suffered and the court will then determine whether the relief flows from the facts) (citing Flaks v. Koegel, 504 F.2d 702, 707 (2d Cir. 1974)). Though courts may hold hearings to assess these damages, a hearing is not required where the plaintiff provides the court with evidence sufficient to permit a damages calculation. See Fed.R.Civ.P. 55(b)(2) (a court may conduct hearings on damages "as it deems necessary and proper"); see also Tamarin v. Adam Caterers, Inc., 13 F.3d 51, 54 (2d Cir. 1993) (district judges are given much discretion to determine whether an inquest need be held); Action S.A. v. Marc Rich Co., Inc., 951 F.2d 504, 508 (2d Cir. 1991) (Fed R. Civ. P. 55(b)(2) "allows but does not require . . . a hearing").
I. STATUTORY DAMAGES
In situations where liability is found under Section 605(a) of the Communications Act, a plaintiff may choose to recover either actual damages (under § 605(e)(3)(C)(i)(I)) or statutory damages (under § 605(e)(3)(C)(i)(II)). Garden City has elected to seek the latter. ( See Proposed Findings at 2.)
Defendants' public exhibition of the Lewis/Tyson fight was an unauthorized interception of radio and cable communications under 47 U.S.C. § 605. That section provides, in pertinent part, that "[n]o 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." Further, this section applies to transmissions which originate by radio or satellite, even if said signals are retransmitted by cable. See, e.g., Time Warner Cable of New York City v. Barnes, 13 F. Supp.2d 543, 547-48 (S.D.N.Y. 1998) (citing Int'l Cablevision, Inc. v. Sykes, 75 F.3d 123, 133 (2d Cir. 1996)).
Because it had a proprietary interest in the intercepted communications, Garden City is a "person aggrieved" within the meaning of 47 U.S.C. § 605 (d)(6), and is entitled to bring this action. An aggrieved person may obtain statutory damages of $1,000 to $10,000 for each violation of Section 605(a), as per Section 605(e)(3)(C)(i)(II). The Court may also increase the award by up to $100,000, if it finds that the violation of Section 605(a) "was committed willfully and for purposes of direct or indirect commercial advantage or private financial gain." 47 U.S.C. § 605(e)(3)(C)(ii). The Court is to award these statutory damages "as [it] considers just." 47 U.S.C. § 605(e)(3)(C)(i)(II).
Section 605(d)(6) provides, in pertinent part, "the term 'any person aggrieved' shall include any person with proprietary rights in the intercepted communication by wire or radio, including wholesale or retail distributors of satellite cable programming."
In this case, Garden City has requested the maximum damages allowed by statute, totaling $110,000 ($10,000 for the violation, plus $100,000 in enhanced damages), against defendants Olympus and Concepcion. ( See Proposed Findings at 5-6.) Garden City has further requested interest on the award, at the rate of 9% per annum, from June 8, 2002. ( See id. at 6; Lonstein Aff. ¶ 29.)
In determining the amount of damages to award in such cases, some courts have based their calculations on the number of patrons present in the establishment when the unauthorized display occurred. See, e.g., Cablevision Sys. Corp. v. 45 Midland Enters., Inc., 858 F. Supp. 42, 45 (S.D.N.Y. 1994) (finding an award of $50 per patron to be "eminently reasonable"); Time Warner Cable of New York City v. Taco Rapido Restaurant, 988 F. Supp. 107, 111 (E.D.N.Y. 1997) (awarding $50 per patron); Time Warner Cable of New York City v. Googies Luncheonette, Inc., 77 F. Supp.2d 485 (S.D.N.Y. 1999) (awarding $50 per patron, as that was approximately the amount charged residential purchasers, while noting that commercial licenses usually range from $500 to $1,500). Other courts have awarded a flat sum. See, e.g., Garden City Boxing Club, Inc. v. DeBlasio, No. 02 Civ. 6669 (GEL) (JCV), 2003 WL 22144395, at *4 (S.D.N.Y. Sept. 8, 2003) (awarding flat sum of $5,000, while noting that a commercial license would have cost the defendant $500, calculated on the basis of $20 per patron, at an establishment with a 25-person capacity).
Here, the record is silent as to the amounts charged by Garden City to other commercial establishments that legitimately acquired the rights to show the Lewis/Tyson fight. The record merely reflects that Garden City charged residential consumers $54.95 for pay-per-view access to the fight. ( See Gagliardi Aff. ¶ 9(B).) Accepting Rielly's estimate that 60 patrons were in Olympus when the fight was shown, and then assessing damages at $50 per person (an amount that other courts have used and that approximates the residential customer rate provided by Garden City), would result in an award of $3,000. While it is less than the $10,000 sought by Garden City, an award of $3,000 would fall within the range of permissible statutory damages, and may well be more than Garden City could have obtained from Olympus pursuant to a license agreement. See Time Warner Cable, 77 F. Supp.2d 485; see also DeBlasio, 2003 WL 22144395, at *4. Further, the maximum statutory award of $10,000 for a single violation should be reserved for "cases where there is evidence of more substantial injury to the plaintiff or profit by the defendant." DeBlasio, 2003 WL 22144395, at *4. Accordingly, I recommend that Garden City be awarded a base amount of $3,000 in statutory damages from defendants Olympus and Concepcion.
The Gagliardi Affidavit mislabels its ninth paragraph as paragraph "5." To correct this apparent typographical error, the Court will refer to the ninth paragraph as paragraph "9."
II. ENHANCEMENT OF DAMAGES
Garden City further requests that, under 47 U.S.C. § 605(e)(3)(C)(ii), its damages be enhanced, as the defendants' violation of Section 605 was purportedly both "willful" and "committed for financial gain or commercial advantage." (Proposed Findings at 6.) Specifically, Garden City requests that its damages be increased by the statutory maximum of $100,000. ( See id.)
Section 605(e)(3)(C)(ii) provides, in pertinent part, that "[i]n 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, the court in its discretion may increase the award of damages, whether actual or statutory, by an amount of not more than $100,000 for each violation of subsection (a)."
"Courts use a variety of factors in determining whether a defendant's conduct is subject to enhanced damages for willfulness, such as allegations of: (1) repeated violations over an extended period of time; (2) substantial unlawful monetary gains; (3) significant actual damages to plaintiff; (4) defendant's advertising for the intended broadcast of the event; and (5) defendant's charging a cover charge or charging premiums for food and drinks." Kingvision Pay-Per-View Ltd. v. Rodriguez, No. 02 Civ. 7972 (SHS), 2003 WL 548891, at *2 (S.D.N.Y. Feb. 25, 2003).
Garden City's Complaint and other submissions are silent as to any prior violations by Olympus or Concepcion. Further, although it can be reasonably inferred that these defendants generated some revenue by showing the fight, Garden City makes no allegations that Olympus or Concepcion reaped "substantial" monetary gains by its unlawful exhibition of the broadcast. Nor does Garden City delineate any actual damages that it suffered, in the form of lost license fees or otherwise. There is also no evidence of these defendants having advertised the broadcast. Finally, Garden City's investigator admits that he paid no cover charge to enter the Olympus establishment ( see Rielly Aff. ¶ 1), and there are no allegations of defendants having charged premiums for food and/or drink.
Garden City does, however, allege that these defendants' display of the fight could not have been accidental. ( See Gagliardi Aff. /?/ 9.) Garden City has outlined some potential means by which Olympus and Concepcion could have unlawfully intercepted the program, including obtaining and installing an unauthorized descrambler, misrepresenting Olympus as a residential purchaser, or splicing the program from an adjacent residence. ( See id.) In any event, Garden City argues that the fight in question could not have been "mistakenly or innocently intercepted," and therefore the defendants' conduct must have been willful. ( See id.) Other courts, on the basis of similar factual allegations, have awarded enhanced damages for this type of violation. See, e.g., DeBlasio at *11 (awarding $5,000 in enhanced damages). On the record presented in this case, I recommend that Garden City be awarded enhanced damages of $5,000 from Olympus and Concepcion, which is the same amount as was awarded in the DeBlasio case, on similar facts, to the same plaintiff.
III. COSTS
Where a Section 605 violation has been demonstrated, a plaintiff is entitled to recover its attorneys' fees and costs. See 47 U.S.C. § 605(e)(3)(B)(iii); see also Time Warner Cable of New York City v. U.S. Cable T.V., Inc., 920 F. Supp. 321, 332 (E.D.N.Y. 1996) (awarding plaintiff $4,500 for investigative costs paid to an informant). Although Garden City does not seek attorneys' fees in this case, it does seek an award of costs, and it has set out and documented certain expenses it incurred in prosecuting this action against Olympus and Concepcion.
Those costs, as against Olympus, are represented to be $241.14, comprised of the following: $13.64 in filing fees; $90 for service of process; and $137.50 in investigative costs. ( See Lonstein Aff. ¶ 30.) As against Concepcion, the costs are represented to be $196.14, comprised of the following: $13.64 in filing fees; $45 for service of process; and $137.50 in investigative costs. ( See id.)
Garden City, however, has not submitted invoices or any other documentation supporting the $137.50 per defendant in investigative costs. These costs, therefore, should not be awarded. Seelnt'l Cablevision, Inc. v. Noel, 982 F. Supp. 904, 918 (W.D.N.Y. 1997) ("There is no reason to allow a prevailing party to recover expenses it has incurred for investigative work without having to describe the precise services performed, the time spent, the rate per hour charged for the services, and the standard charge for such services in the district."). Based on Garden City's other submissions, which are adequate, I recommend that it be awarded costs against Olympus and Concepcion in the amount of $162.28.
IV. PRE-JUDGMENT INTEREST
Garden City further requests an award of pre-judgment interest at the rate of 9% per annum from the date of the fight, June 8, 2002. ( See Lonstein Aff. ¶ 29.) "The question of whether interest is to be allowed, and also the rate of computation, is a question of federal law where the cause of action arises from a federal statute." Connecticut General Life Ins. Co. of New York v. Cole, 821 F. Supp. 193, 202 (S.D.N.Y. 1993) (quoting Dependahl v. Falstaff Brewing Corp., 653 F.2d 1208, 1218 (8th Cir. 1981)). "A district court has discretion to impose a pre and post-judgment interest award to make a plaintiff whole." Williams v. Trader Publ'g Co., 218 F.3d 481, 488 (5th Cir. 2000).
Here, if enhanced damages are awarded as recommended above, it is likely that Garden City would be made whole by the total award, without need for pre-judgment interest to serve that purpose. See, e.g., Garden City Boxing Club, Inc. v. Orama, No. 02 Civ. 6670 (LAK) (LMS), (S.D.N.Y. Aug. 12, 2003) (Smith, M.J.), report recommendation adopted, No. 02 Civ. 6670 (LAK), 2003 WL 22096481 (S.D.N.Y. Sept. 15, 2003) (declining to award pre-judgment interest, on similar facts, because "plaintiff will be more than fully compensated for its lost licensing fees and any interest it could have earned on such fees" by virtue of the damages otherwise awarded by the court). This Court therefore recommends that Garden City not be awarded pre-judgment interest in this case.
CONCLUSION
For the reasons set forth above, I recommend:
(1) that judgment be entered in favor of Garden City Boxing Club, Inc., against defendants Olimpus Restaurant Inc. and Maria Argentina Concepcion, jointly and severally, in the amount of:
(a) $3,000 in statutory damages,
(b) $5,000 in enhanced damages, and
(c) $162.28 in costs,
for a total of $8,162.28, and
(2) that no prejudgment interest on damages be awarded in this case.
Pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure, the parties shall have ten (10) days from service of this Report to file written objections. See also Fed.R.Civ.P. 6. Such objections, and any responses to objections, shall be filed with the Clerk of the Court, with courtesy copies delivered to the chambers of the Honorable George B. Daniels, and to the chambers of the undersigned, United States Courthouse, 40 Centre Street, Room 631, New York, New York, 10007. Any requests for an extension of time for filing objections must be directed to Judge Daniels. FAILURE TO FILE OBJECTIONS WITHIN TEN (10) DAYS WILL RESULT IN A WAIVER OF OBJECTIONS AND WILL PRECLUDE APPELLATE REVIEW. See Thomas v. Am, 474 U.S. 140, 155 (1985); IUE AFL — CIO Pension Fund v. Hermann, 9 F.3d 1049, 1054 (2d Cir. 1993); Frank v. Johnson, 968 F.2d 298, 300 (2d Cir. 1992); Wesolek v. Canadair Ltd., 838 F.2d 55, 58 (2d Cir. 1988); McCarthy v. Manson, 714 F.2d 234, 237-38 (2d Cir. 1983).