Opinion
05 CV 5805 (RJD).
April 19, 2007
REPORT AND RECOMMENDATION
On December 12, 2005, plaintiff J J Sports Productions, Inc. ("plaintiff") commenced this suit against defendants Juan Rodrigues, individually and doing business as KACU Barber Shop, also known as KACU Barber Shop Unisex, also known as KACU Barber Shop Unisex ("KACU") and (collectively, "KACU" or "defendants"), alleging a violation of Section 705 of the Communications Act of 1934, as amended, 47 U.S.C. §§ 553 and 605. Despite proper service, defendants failed to appear and upon plaintiff's application, the Clerk of Court entered a default against defendants on April 17, 2006. The matter was then referred to the undersigned magistrate judge for the purpose of conducting an inquest and to report and recommend a damages award.
For the foregoing reasons, this Court respectfully recommends that, pursuant to 47 U.S.C. §§ 605(e)(3)(C)(i)(II) and 605(e)(3)(B)(iii), plaintiff be awarded statutory damages of $4,000, plus $1,575 in attorney's fees and costs.
BACKGROUND
Plaintiff entered into a closed-circuit television licensing agreement in which plaintiff was granted exclusive rights to televise the March 19, 2005 championship boxing match between Erik Morales and Manny Pacquaio (the "Event") on closed circuit television located in bars, restaurants, theaters, arenas, and clubs throughout New York. (Affidavit of Joseph Gagliardi ("Gagliardi Aff.") ¶ 3, Ex. A; Compl. ¶ 15). These closed-circuit locations could only obtain access to the broadcast by entering into a contractual relationship with plaintiff, which required each establishment to pay a sublicense fee to plaintiff. (Gagliardi Aff. ¶ 3; Compl. ¶¶ 15, 16). In order to receive access to the interstate satellite transmission of the Event, each participating establishment was provided with an unscrambled signal. (Pl.'s Mem. at 3).
Citations to "Compl." refer to the Complaint dated December 12, 2005.
Citations to "Pl.'s Mem." refer to Plaintiff's Memorandum of Law, dated April 11, 2006.
Plaintiff alleges that KACU is a commercial establishment located at 112-19 Jamaica Avenue, Richmond Hill, New York. (Compl. ¶ 10; Gagliardi Aff. ¶ 7). On March 19, 2005, at approximately 11:08 p.m., Allen Delvecchio, an auditor for plaintiff, was present at the barbershop when he observed defendants, without prior authorization, intercept, receive and then broadcast the Event to patrons of the defendant establishment. (Gagliardi Aff. ¶ 7; Ex. C (Affidavit of Allen Delvecchio, Auditor for Plaintiff)). According to Mr. Delvecchio's Affidavit, he observed one television set and approximately 8 patrons on the premises at the time of the broadcast. (Gagliardi Aff. ¶ 7, Ex. C).
The Court notes that the investigator's affidavit refers to his observation of the boxers "Arce" and "Hussen [sic]," not Erik Morales and Manny Pacquaio. (Gagliardi Aff., Ex. C). However, the Court has determined that Jorge Arce and Hussein Hussein were the undercard fighters to the Morales-Pacquaio fight. The licensing agreement for the Morales-Pacquaio fight includes not only the title fight, but also "selected undercard bouts (fighters subject to change)." (Id., Ex. A). Accordingly, the investigator's observation of the Arce-Hussein fight, which was broadcast and licensed as part of the Morales-Pacquaio fight, demonstrates that defendants were viewing the Event.
On December 12, 2005, plaintiff commenced this action, seeking statutory damages pursuant to 47 U.S.C. §§ 553 and 605. Plaintiff served copies of the summons and complaint upon the defendants, pursuant to the Federal Rules of Civil Procedure. When defendants failed to answer or otherwise respond to the complaint, plaintiff moved for entry of default, which was then entered by the Clerk of Court on April 17, 2006. By order dated April 19, 2006, the district court referred the matter to this Court to issue a Report and Recommendation.
DISCUSSION
A. Default
Rule 55 sets forth a two-step process in which first a default, and then a default judgment, is entered. See Enron Oil Corp. v. Diakuhara, 10 F.3d 90, 95 (2d Cir. 1993). The court clerk automatically enters the default pursuant to Rule 55(a) of the Federal Rules of Civil Procedure by noting the party's default on the clerk's record of the case. See id.; Fed.R.Civ.P. 55(a) (providing that "[w]hen a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend as provided by these rules and that fact is made to appear by affidavit or otherwise, the clerk shall enter the party's default").
After a default has been entered against a party, if that party fails to appear or otherwise move to set aside the default pursuant to Rule 55(c), a default judgment may be entered. See Fed.R.Civ.P. 55(b). If the amount of damages must be ascertained in order for default judgment to be entered, the court may conduct a hearing. See Fed.R.Civ.P. 55(b)(2); Enron Oil Corp. v. Diakuhara, 10 F.3d at 95. Here, plaintiff submitted a request for entry of default dated April 17, 2006. The Clerk of the Court entered a default on April 17, 2006.
The Court notes that while the docket sheet states that a "Default Judgment" was entered against defendants on April 20, 2006, and plaintiff submitted its paperwork as though a default judgment had been entered, a review of the pertinent document indicates that the district court only referred the matter to this Court to issue a Report and Recommendation, but did not enter default judgment. Accordingly, the Court here respectfully offers a recommendation as to whether default judgment should enter against defendants.
In determining whether a default judgment should enter, courts have cautioned that a default judgment is an extreme remedy that should only be granted as a last resort. See Meehan v. Snow, 652 F.2d 274, 277 (2d Cir. 1981). While the Second Circuit has recognized the "push on a trial court to dispose of cases that, in disregard of the rules, are not processed expeditiously [and] . . . delay and clog its calendar," it has held that the district court must balance the interest in expediting cases with the court's responsibility to "[afford] litigants a reasonable chance to be heard." Enron Oil Corp. v. Diakuhara, 10 F.3d at 95-96. Thus, in light of the "oft-stated preference for resolving disputes on the merits," defaults are "generally disfavored," and doubts should be resolved in favor of the defaulting party. Id. at 95-96. Accordingly, the plaintiff is not entitled to a default judgment as a matter of right, simply because the defendants are in default. See Erwin DeMarino Trucking Co. v. Jackson, 838 F. Supp. 160, 162 (S.D.N.Y. 1993) (stating that courts are required to "supervise default judgments with extreme care to avoid miscarriages of justice," and ordering an inquest to determine damages).
The court possesses significant discretion and may consider a number of factors in deciding whether or not to grant a default judgment, including whether the grounds for default are clearly established and what amount of money is potentially involved. See Hirsch v. Innovation Int'l, Inc., No. 91 CV 4130, 1992 WL 316143, at *1-2 (S.D.N.Y. Oct. 19, 1992). The greater the amount of money involved, the less justification there may be for entering the default judgment. See id. Additionally, a court may consider whether material issues of fact remain, whether the facts alleged in the complaint state a valid cause of action, whether plaintiff has been substantially prejudiced by the delay involved, and how harsh an effect a default judgment might have on the defendant. See Au Bon Pain Corp. v. Artect, Inc., 653 F.2d 61, 65 (2d Cir. 1981); 10A Charles Alan Wright, Arthur R. Miller, Mary Kay Kane, Federal Practice Procedure, §§ 2685, 2688 (3d ed. 1998).
When a default is entered, the defendant is deemed to have admitted all of the well-pleaded factual allegations in the complaint pertaining to liability. See Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992),cert. denied, 506 U.S. 1080 (1993); see also Montcalm Publ'g Corp. v. Ryan, 807 F. Supp. 975, 977 (S.D.N.Y. 1992) (citing cases). For the purposes of an inquest, a court accepts as true all factual allegations in the complaint, except those claims relating to damages. See Au Bon Pain Corp. v. Artect, Inc., 653 F.2d at 65.
Plaintiff alleges that the defendants violated 47 U.S.C. §§ 553(a)(1) and 605(a) through the unauthorized reception of plaintiff's satellite communications. However, a court is not permitted to grant damages under both statutes for a single illegal transmission. See International Cablevision, Inc. v. Sykes, 75 F.3d 123 (2d Cir.), cert. denied, 519 U.S. 929 (1996). Rather, the Second Circuit has stated that where a defendant is found to have violated both statutes, the court should award damages pursuant to Section 605. Id.; see also Garden City Boxing Club, Inc. v. Polanco, No. 05 CV 3411, 2006 WL 305458, at *5 (S.D.N.Y. Feb. 7, 2006), aff'd, 2007 WL 1098112, at * 1 (2d Cir. April 5, 2007). Since plaintiff may only receive statutory damages under one statutory provision, this Court has considered plaintiff's request for damages under Section 605.
Section 553(a)(1) provides, in pertinent part: "No person shall intercept or receive or assist in intercepting or receiving 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).
Here, it is clear that the allegations in the Complaint establish the elements of liability necessary to state a claim under Section 605. Section 605(a), which provides, inter alia, that "[n]o person not being authorized by the sender shall intercept any radio communications and divulge or publish the . . . contents . . . of such intercepted communication to any person," 47 U.S.C. § 605(a), has been held to apply to the interception of cable communications originating as a satellite or radio transmission. See International Cablevision, Inc. v. Sykes, 75 F.3d 123; see also Garden City Boxing Club, Inc. v. Polanco, 2006 WL 305458, at *5; Entertainment by J J, Inc. v. Mama Zee Rest. Catering Servs., Inc., No. 01-3945, 2002 WL 2022522, at * 2 (E.D.N.Y. May 21, 2002); Time Warner Cable of New York City v. Taco Rapido Restaurant, 988 F. Supp. at 109. Here, defendants' alleged conduct — the unauthorized interception, receipt, and broadcast of the Event derived from satellite communications — violates this statute.
It is beyond dispute that defendants are in default. They have not only failed to file an answer or otherwise move with respect with the complaint, but they have also failed to respond either to plaintiff's motion for entry of default judgment or to the Order from this Court dated April 24, 2006, relating to the calculation of damages. Thus, plaintiff's evidence on damages is unrefuted. Given the numerous opportunities afforded defendants, and their apparent lack of interest in participating in these proceedings, there is no compelling reason to delay further.
Accordingly, it is respectfully recommended that plaintiff's motion for entry of a default judgment be granted.
B. Damages
Unlike allegations pertaining to liability, allegations in connection with damages are not deemed admitted in the context of a default judgment. The burden is on the plaintiff to establish its entitlement to recovery. See Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d at 158. While "the court must ensure that there is a basis for the damages specified in the default judgment, it may, but need not make the determination through a hearing." Fustok v. Conticommodity Servs., Inc., 122 F.R.D. 151, 156 (S.D.N.Y. 1988) (citing Transportes Aereos De Angola v. Jet Traders Inv. Corp., 624 F. Supp. 264, 266 (D. Del. 1985)), aff'd, 873 F.2d 38 (2d Cir. 1989).
Where, as here, the plaintiff has filed reasonably detailed affidavits and exhibits pertaining to the damages incurred and where the defendants have failed to make an appearance in the case, or respond and present evidence on the issue of damages, the Court can make an informed recommendation regarding damages without an evidentiary hearing.
1. Statutory Damages
Where, as here, a violation of Section 605 has occurred, plaintiff is entitled to elect statutory damages. 47 U.S.C. § 605(e)(3)(C)(i). Section 605 provides for penalties "for each violation of subsection (a) of this section . . . in a sum 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) (emphasis added). Although Section 605 requires the court to assess damages based on each "violation" of the statute, there is no statutory definition of "violation." See Garden City Boxing Club, Inc. v. Rosado, No. 05 CV 1037, 2005 WL 3018704, at *3 (E.D.N.Y. Oct. 6, 2005). Moreover, in cases such as this, involving the theft of services by a commercial establishment, it is often difficult to assess a precise figure. However, most cases applying this statute in a commercial context have interpreted the showing of a single event on a single night as one violation. See, e.g., id.;Time Warner Cable v. Taco Rapido Rest., 988 F. Supp. 107, 111 (E.D.N.Y. 1997).
In determining the amount of damages that can be imposed for each violation within the range of $1,000 to $10,000 per violation, Section 605 leaves the decision within the sound discretion of the court. See 47 U.S.C. § 605(e)(3)(C)(i)(II); see also Home Box Office v. Champs of New Haven, Inc., 837 F. Supp. 480, 484 (D. Conn. 1993) (reducing an award from $250,000 to $10,000 for commercial broadcast of a boxing match); Time Warner Cable v. Taco Rapido Rest., 988 F. Supp. at 111 (citing cases). The factors to be considered in determining the appropriate amount of damages include the "'pecuniary loss sustained by the victim as a result of the offense, the financial resources of the defendant, . . . the financial needs and earning ability of the defendant. . . . as well as the burden that a damage award would impose on the defendant relative to the burden alternative relief would impose.'" Cablevision Sys. Corp. v. De Palma, No. 87 CV 3528, 1989 WL 8165, at *6 (E.D.N.Y. Jan. 17, 1989) (quotingCablevision Sys. Dev. Co. v. Cohen, No. 84 CV 1155, slip. op. at 4-5 (E.D.N.Y. May 20, 1988) (interpreting 47 U.S.C. § 553)); see also Entertainment By J J, Inc. v. Ramsarran, No. 01 CV 5223, 2002 WL 720480, at *2 (E.D.N.Y. Mar. 11, 2002).
In calculating lost profits, some courts have awarded a flat damage amount when considering the unauthorized receipt and broadcast of a cable program by a commercial establishment. See, e.g., Kingvision Pay-Per-View Ltd. v. Rodriguez, No. 02 CV 7972, 2003 WL 548891, at *2 (S.D.N.Y. Feb. 25, 2003); Cablevision Sys. Corp. v. Maxie's North Shore Deli Corp., No. 88 CV 2834, 1991 WL 58350, at *2 (E.D.N.Y. Mar. 20, 1991); Home Box Office v. Champs of New Haven, Inc., 837 F. Supp. at 484. Others have assessed damages based on the number of patrons in the commercial establishment during the broadcast. See, e.g., Garden City Boxing Club v. Rosado, No. 05 CV 1037, 2005 WL 3018704, at *4 (E.D.N.Y. Oct.6, 2005); Top Rank Inc. v. Tacos Mexicanos, No. 01 CV 5977, 2003 WL 21143072, at *4-5 (E.D.N.Y. Mar. 28, 2003) (awarding $50 per patron);Entertainment by J J. Inc. v. Mama Zee Rest. Catering Servs., Inc., No. 01 CV 3945, 2002 WL 20222522, at *4 (E.D.N.Y. May 21, 2002) (same); Time Warner Cable of New York City v. Googies Luncheonette, Inc. ("Googies"), 77 F. Supp. 2d 485, 489-90 (S.D.N.Y. 1999) (same); Time Warner Cable of New York City v. Taco Rapido Restaurant, 988 F. Supp. at 111 (same); Cablevision Sys. Corp. v. 45 Midland Enters., Inc., 858 F. Supp. 42, 45 (S.D.N.Y. 1994) (same).
Plaintiff asserts that there are a number of components to the pecuniary loss suffered here, including lost sublicense fees, and loss of good will. (Gagliardi Aff. ¶¶ 11-16). Plaintiff additionally speculates in its Memorandum of Law that the "exhibition most likely led to an increased number of patrons and, thus, and increase in profits from food and beverages." (Pl.'s Mem. at 4). However, plaintiff fails to explain how this could be the case, given that the establishment is a barbershop, and that the investigator wrote "n/a" on the portion of his affidavit asking if he ordered a beverage at the bar, presumably indicating that the question was not applicable, because this business did not in fact sell beverages. (Gagliardi Aff., Ex. C).
Plaintiff also seeks enhanced statutory damages pursuant to Section 605(e)(3)(C)(ii), providing for additional awards of up to a maximum of $100,000 for all violations. (Pl.'s Mem. at 10). The statute permits enhanced damages where the violation was committed willfully and for purposes of private financial gain.See, e.g., J J Sports Productions, Inc. v. Benson, No. 06 CV 1119, 2007 WL 951872, at *5 (E.D.N.Y. Mar. 27, 2007) (awarding statutory damages of $1,200, and enhanced damages of $3,600 where plaintiff did not advertise the event, charged no cover, and five patrons were present); Entertainment by J J, Inc. v. Ramsarran, No. 01 CV 5223, 2002 WL 720480, at *2 (E.D.N.Y. Mar. 11, 2002) (awarding statutory damages of $5,000, increased by $10,000 for willfulness under 47 U.S.C. § 605(e)(3)(C)(ii), where defendant displayed a boxing match to eighteen patrons in his bar); Time Warner Cable of New York City v. Taco Rapido Rest., 988 F. Supp. at 111-12 (E.D.N.Y. 1997) (awarding statutory damages of $3,750, increased by $5,000 for willfulness under section 605(e)(3)(C)(ii), where defendant displayed a boxing match to seventy-five people inside and twenty people outside his restaurant); Joe Hand Promotions v. Burg's Lounge, 955 F. Supp. 42, 44 (E.D. Pa. 1997) (awarding $1,000 in statutory damages under § 605(e)(3)(C)(i)(II) plus an additional $1,000 based on the willful nature of the violation under § 605(e)(3)(C)(ii) where defendants were found to have broadcast a boxing event in their respective taverns). This section clearly applies to persons or entities that operate commercial establishments such as bars, taverns, and restaurants that exhibit unauthorized programming to its patrons. See Time Warner Cable of New York City v. Taco Rapido Restaurant, 988 F. Supp. at 112.
2) Application
If statutory damages were assessed at the rate of $50 per patron as some courts have done, this would result in an award of $400 in lost revenue based on the eight patrons present during the broadcast of the Event. This amount would be less than the statutory minimum of $1,000. See 47 U.S.C. § 605(e)(3)(C)(ii);Kingvision Pay-Per-View Ltd. v. Autar, 426 F. Supp. 2d 59, 65 (E.D.N.Y. 2006) (awarding $1,000 where multiplying the number of patrons by $50 would lead to a total less than the statutory minimum). The Court additionally notes that $400 is less than the amount of damages often imposed against individuals who have received unauthorized programming in their own homes. See, e.g.,Time Warner Cable v. Barnes, 13 F. Supp. 2d 543, 548 (S.D.N.Y. 1998) (awarding statutory damages of $1,000 against each of two defaulting residential defendants); Time Warner Cable v. Rivera, No. 94 CV 2339, 1995 WL 362429, at *3 (E.D.N.Y. June 8, 1995) (awarding statutory damages of $1,500 against defaulting residential defendant who used converter for eight months).
This Court finds that such an amount would understate the seriousness of defendants' conduct here, particularly since, as plaintiff contends, it has suffered intangible losses in the form of "business investment, business opportunities, reputation, and goodwill." American Television Communications Corp. v. Floken, Ltd., 629 F. Supp. 1462, 1466 (M.D. Fla. 1986). Specifically, plaintiff fears that legitimate commercial establishments will be unwilling and unable to compete financially with establishments such as that of the defendants, which offer the stolen programming to their customers for no fee. (Gagliardi Aff. ¶¶ 15-16). Defendants' acts also damage plaintiff's goodwill and ability to control and negotiate for the rights to transmit the Event and similar events. (Id.) Accordingly, the Court respectfully recommends that plaintiff be awarded $1,000 in statutory damages.
In addition, the evidence demonstrates that defendants acted willfully in illegally intercepting the Event under circumstances warranting imposition of enhanced damages under Section 605(e)(3)(C)(ii). Willful behavior under the statute has been interpreted to include "'disregard for the governing statute and an indifference for its requirements.'" ON/TV of Chicago v. Julien, 763 F.2d 839, 844 (7th Cir. 1985) (quoting TransWorld Airlines, Inc. v. Thurston, 469 U.S. 111, 127 (1985)). Here, it is clear that defendants intercepted and broadcast the Event without entering into a licensing agreement with plaintiff or paying fees to plaintiff. To accomplish this, defendants must have utilized an unauthorized decoder, illegally transferred an authorized decoder to the location, or illegally altered cable service to bring the signal to the defendants' establishment. (Gagliardi Aff. ¶ 10). The defendants then broadcast the Event to its patrons. Thus, the evidence indicates that defendants acted willfully in illegally intercepting the Event.
One court in this district has noted that it is conceivable that a small business owner could accidentally sign up for residential cable service, or that an error on the part of a cable service provider could lead to a business being improperly categorized as a residence, thereby bringing into question whether or not a defendant willfully committed the violation. See J J Sports Productions, Inc. v. Louisias, No. 06 CV 339, 2006 WL 1662608, at *4 (E.D.N.Y. May 16, 2006). However, given that in this case defendants have defaulted, this Court declines to speculate as to potential excuses for what appears to be a willful interception of the event.
However, unlike cases involving bars and restaurants, defendants' establishment was a barbershop that was not charging an entrance fee, and was not selling food or beverages. (See id., Ex. C). There is no evidence that KACU advertised or took any other actions to solicit business based on the exhibition of the Event. Nor has plaintiff presented any evidence that the barbershop in fact experienced an increase in the number of patrons as a result of the Event. Thus, while its actions were willful, the Court has taken into account the nature of the business, and that any profit defendants may have gained from their misdeed was likely minimal.See, e.g., J J Sports Productions, Inc. v. Benson, 2007 WL 951872, at *5 (noting that "[p]laintiff does not allege that the defendants advertised or displayed the Event to entice patrons into the Establishment, imposed an admission or cover charge, or that the Establishment brought in significant income as a result of displaying the Event"); Kingvision Pay-Per-View, Ltd. v. Lugo, No. 06 CV 2512, 2006 WL 3422660, at *4 (E.D.N.Y. Nov. 28, 2006) (finding that where no cover was charged to patrons, and there were no advertisements in the community, that the court was "hard pressed to conclude that a bodega . . . benefits commercially to any great extent from the exhibition of an illegally obtained boxing event"); Kingvision Pay-Per-View Ltd. v. Autar, 426 F. Supp. 2d at 64 (E.D.N.Y. 2006) (noting that where a small business did not collect a cover charge, and attracted fewer than 20 patrons for viewing a fight, likely profits were minimal). Given the willful nature of the violation, and mindful of the minimal financial gain to a barbershop that did not serve beverages, charged no cover fee, and did not appear to advertise the event, this Court concludes that an award of treble the statutory damages is more than sufficient to deter future violations. This Court therefore respectfully recommends that plaintiff be awarded $3,000 in enhanced damages.
See, e.g., J J Sports Productions, Inc. v. Benson, 2007 WL 951872, at *5 (awarding three times the statutory award, or $3,600, in enhanced damages); Kingvision Pay-Per-View Ltd. v. Espinosa, No. 05 CV 10178, 2007 WL 625362, at *4 (S.D.N.Y. Feb. 28, 2007) (awarding $3,500 in total damages where defendant was a small barbershop); Kingvision Pay-Per-View, Ltd. v. Echeverria, No. 06 CV 1266, 2007 WL 595025, at *4 (E.D.N.Y. Feb. 22, 2007) (ordering a small barbershop to pay an "enhancement of three times the damages award, or $3,750"); Kingvision Pay-Per-View, Ltd. v. Lugo, 2006 WL 3422660, at *4 (awarding $2,500 in enhanced damages for a bodega that did not appear to have experienced great financial gain); but see J J Sports Productions, Inc. v. Daley, No. 06 CV 238, Report and Recommendation of Orenstein, MJ (E.D.N.Y. Feb. 15, 2007) (finding that plaintiff failed to establish that defendant had willfully committed the violation, and further had not committed the violation for financial gain, and accordingly declining to recommend an award of enhanced damages from a barbershop), adopted by Order of the Honorable Edward R. Korman (E.D.N.Y. March 19, 2007); J J Sports Productions, Inc. v. Louisias, 2006 WL 1662608, at *4 (same). This Court elects to recommend a small amount of enhanced damages in keeping with the majority of courts in this district, and given that were the recommendation limited to non-enhanced statutory damages the total statutory award would be only $1,000, an amount that is less than what many residential violators pay.See Time Warner Cable v. Rivera, 1995 WL 362429, at *3 (E.D.N.Y. June 8, 1995) (awarding statutory damages of $1,500 against defaulting residential defendant).
Accordingly, in light of the willful nature of the violation, it is respectfully recommended that plaintiff be awarded statutory damages of $1,000, plus an additional $3,000 in enhanced damages, for a total of $4,000 in damages.
3) Injunctive Relief
Under 47 U.S.C. § 605(e)(3)(B)(i), a court "may grant temporary and final injunctions on such terms as it may deem reasonable to prevent or restrain violations of [§ 605(a)]." A court "'may . . . issue an injunction on a motion for default judgment provided that the moving party shows that (1) it is entitled to injunctive relief under the applicable statute, and (2) it meets the prerequisites for the issuance of an injunction.'" Kingvision Pay-Per-View Ltd. v. Autar, 426 F. Supp. 2d at 65 (internal quotation omitted). To warrant injunctive relief, plaintiff must show, inter alia, the absence of an adequate remedy at law. See Rondeau v. Mosinee Paper Corp., 422 U.S. 49, 57 (1975).
Courts have held that where there is no suggestion that a small commercial establishment is likely to repeat its conduct, "or that the remedies available under § 605 will not be adequate to deal with any further transgressions . . ., it is difficult to fathom what this Court's injunction could add to the deterrence offered by § 605" and the "hefty price" that it places upon violations. Kingvision Pay-Per-View Ltd. v. Autar, 426 F. Supp. 2d at 65; see also Kingvision Pay-Per-View Ltd. v. Lalaleo, 429 F. Supp. 2d 506, 516 (E.D.N.Y. 2006) (denying injunctive relief in the absence of any evidence "that plaintiff will suffer irreparable harm or that the statutory and enhanced damages are insufficient to deter future conduct").
An injunction may be warranted where a large-capacity commercial defendant repeatedly disregards the statute, such that its profits weigh significantly against the statutory penalties.See, e.g., Kingvision Pay-Per-View, Ltd. v. Batista, No. 05 CV 614, 2005 WL 2999427, at *5 (E.D.N.Y. Oct. 6, 2005) (granting permanent injunction upon defendants' fourth "egregious" violation, where each illegal broadcast was to more than 120 patrons in a commercial establishment with a maximum occupancy of 250, and where defendants "are undeniably deriving increased revenue by continuing to show these pirated boxing events in their establishment"); but see Top Rank, Inc. v. Allerton Lounge, Inc., No. 96 CV 7864, 1998 WL 35151728, at *6 (S.D.N.Y. Mar. 5, 1998) (enjoining defendants without records of prior violations and serving 75 or fewer patrons from future unauthorized broadcasting), adopted with modifications, 1998 WL 35152791 (S.D.N.Y. Mar. 25, 1998); Cablevision Sys. Corp. v. Maxie's N. Shore Deli Corp., 1991 WL 58350, at *2 (granting injunction against defendant without noting any prior violations and without determining actual number of patrons in sports bar, below uncredited estimate of 500).
In this case, defendants operate a small barbershop, charged no entrance fees, were serving only 8 patrons at the time of the showing, have an estimated maximum capacity of 12 patrons, and have no documented history of violations. (See Gagliardi Aff. ¶ 7, Ex. C). Although plaintiff requested injunctive relief in its Complaint, plaintiff has failed to submit any information in connection with its request for default damages that would support a finding that injunctive relief is appropriate under the circumstances of this case. In the absence of any further showing, this Court respectfully recommends that any request for injunctive relief be denied.
C. Individual Defendant
Plaintiff's complaint names both KACU and Juan Rodrigues as an officer, director, shareholder and/or principal of KACU, and as the person with "supervisory capacity and control over the activities occurring within the establishment" on the night of the Event. (Compl. ¶¶ 7-8). To establish a contributory violation of 47 U.S.C. § 605(a), plaintiff is required to demonstrate that Rodrigues authorized the violations set forth in the complaint.Garden City Boxing Club, Inc. v. Morales, No. 05 CV 64, 2005 WL 2476264, at *10 (E.D.N.Y. Oct. 7, 2005) (citing cases); see also Softel Inc. v. Dragon Med. Sci. Communications, 118 F.3d 955, 971 (2d Cir. 1997). To establish vicarious liability, plaintiff may alternately show that Rodrigues had both a right to supervise the infringing activities and that he had an obvious and direct financial interest in the exploitation of the copyrighted materials. See Garden City Boxing Club, Inc. v. Morales, 2005 WL 2476264, at *10 (quoting Softel Inc. v. Dragon Med. Sci. Communications, 118 F.3d at 971).
The undisputed allegations in the Complaint indicate that Rodrigues had the requisite control and financial interest to be held vicariously liable for the violation. (See Compl. ¶ 7-8). Accordingly, the Court respectfully recommends that defendant Juan Rodrigues be held jointly and severally liable for damages awarded in this action.
One court in this district recently found that similar allegations by the same plaintiff were not sufficient to hold an individual defendant vicariously liable because that plaintiff had not demonstrated sufficient control by the owner, or financial interest in the violation. See J J Sports Productions, Inc. v. Daley, No. 06 CV 238. However, mindful of the difficulty that plaintiffs face producing evidence in default cases such as this, and in keeping with the majority of courts in this district, the Court recommends that the individual defendant be held vicariously liable. See, e.g., J J Sports Productions, Inc. v. Benson, 2007 WL 951872, at *7 (finding individual defendant vicariously liable); Garden City Boxing Club, Inc. v. Morales, No. 05 CV 64, 2005 WL 2476264, at *10 (E.D.N.Y. Oct. 7, 2005) (same).
D. Attorney's Fees and Costs
Pursuant to Section 605(e)(3)(B)(iii), plaintiff is also entitled to costs and reasonable attorney's fees. See 47 U.S.C. § 605(e)(3)(B)(iii) (stating that the court "shall direct the recovery of full costs . . . to an aggrieved party who prevails"); see also Int'l Cablevision v. Sykes, 997 F.2d at 1009. Plaintiff's counsel seeks attorney's fees in the amount of $1,125 from the defendants. (Lonstein Aff. ¶¶ 3, 4). In support of plaintiff's fee request, counsel has submitted the affidavit of Julie Cohen Lonstein, Esq., setting forth the nature of the services rendered, the hourly rate charged, the date and amount of time spent on each task. See Ass'n for Retarded Children v. Casey, 711 F.2d 1136, 1148 (2d Cir. 1983). Specifically, counsel's affidavit lists five entries totaling 4.5 hours of work by an attorney with a billing rate of $200 per hour, and seven entries totaling 3 hours spent by a paralegal, billed at the rate of $75 per hour. (Lonstein Aff. ¶ 4). Based on a review of the services performed, and this Court's knowledge of similar fee applications, the Court finds the rates charged and the work performed to be reasonable. Accordingly, this Court respectfully recommends that plaintiff be awarded $1,125 in reasonable attorney's fees.
Citations to "Lonstein Aff." refer to the Affidavit of Julie Cohen Lonstein, dated April 11, 2006.
In addition to attorney's fees, counsel has submitted a sworn affidavit seeking reimbursement for filing fees of $250, plus service of process fees of $200, and investigative costs of $350. (Lonstein Aff. ¶ 3; Gagliardi Aff., Ex. D). The taxable costs for which a party may seek reimbursement include service of process fees and filing fees. See 28 U.S.C. § 1920. Investigative fees may also be awarded by courts, but such an award is not mandatory. See 130 Cong. Rec. § 14288 (daily ed. Oct. 4, 1984), reprinted in 1984 U.S.C.C.A.N. 4742, 4750 (stating that "[i]t is the intent of the committee that the power to direct the recovery of all costs under (3)(b)(iii) shall include reasonable investigative fees (related to the action brought) of an aggrieved party"); see also J J Sports Productions, Inc., v. Doe, No. 05 CV 6083, 2007 WL 446351, at *6 (E.D.N.Y. Feb. 6, 2007) (finding that the award of investigative fees is in the discretion of the court).
Although the Court may direct that investigative costs be awarded, it is not obliged to. See J J Sports Productions, Inc., v. Doe, 2007 WL 446351, at *6; see also International Cablevision, Inc. v. Noel, 982 F. Supp. 904, 918 (W.D.N.Y. 1997) (stating that the "legislative history for § 605(e) instructs that the court has the power to direct the recovery of investigative fees, not that the court is required to order such an award"). The court in Noel suggested that the party requesting investigative costs must "supply contemporaneous time records to substantiate the fee request," as "a request for investigative fees pursuant to § 605(e)(3)(B)(iii) should be subject to the same level of scrutiny to which requests for attorney's fees are subjected." Id. at 917-18; see also J J Sports Productions, Inc. v. Doe, 2007 WL 446351, at *6 (requiring plaintiff to document the amount of time necessary for the investigation, the investigator's hourly rate, and evidence of the investigator's qualifications). Here, plaintiff has submitted an affidavit from the auditor who conducted the investigation, along with an invoice describing the services performed. (Gagliardi Aff., Exs. D, E). Plaintiff has also submitted an affidavit from the vice-president of plaintiff's company describing the process of selecting auditors, and the fee for their investigative services. (Id. ¶¶ 4-5, 9). Plaintiff's documentation indicates that the investigator spent only two minutes inside of the barbershop, and then later took two photographs of the exterior of the business. (Id., Ex. D).
The documentation provided is not sufficient to justify $350 as a reasonable fee for activity that required extremely minimal time and skill. See, e.g., J J Sports Productions, Inc. v. Smith, No. 06 CV 243, 2007 WL 595090, at *5 (E.D.N.Y. Feb. 22, 2007) (denying investigative fees where "plaintiff seeks to recover $350 it claims to have paid to its investigator, but the investigator states that he spent only fifteen minutes at the bar"); Kingvision Pay-Per-View Ltd. v. Autar, 426 F. Supp. 2d at 66-67 (denying investigative fees where investigator was present in the establishment "for 3 minutes, and returned two days later to take two photographs of the exterior of the restaurant"). Accordingly, the Court declines to recommend an award for investigative fees in this case.
However, based on the supporting affidavits, this Court finds the $450 for service of process and filing fees to be reasonable, and therefore respectfully recommends that plaintiff be awarded $450 in total costs from defendants.
The Court notes that in its Memorandum of Law, plaintiff seeks an award of prejudgment interest. (Pl.'s Mem. at 8). By letter dated May 17, 2006, plaintiff's counsel withdrew that request.
CONCLUSION
Accordingly, this Court respectfully recommends that plaintiff be awarded $1,000 in statutory damages, plus an additional $3,000 in enhanced damages, $1,125 in attorney's fees, and $450 in costs, for a total award of $5,575.Any objections to this Report and Recommendation must be filed with the Clerk of the Court, with a copy to the undersigned, within ten (10) days of receipt of this Report. Failure to file objections within the specified time waives the right to appeal the District Court's order. See 28 U.S.C. Section 636(b)(1); Fed.R.Civ.P. 6(a), 6(e), 72; Small v. Secretary of Health Human Servs., 892 F.2d 15, 16 (2d Cir. 1989).
The Clerk is directed to send copies of this Order to the parties either electronically through the Electronic Case Filing (ECF) system or by mail.