Opinion
No. 02 Civ. 5632 (JFK)(FM).
May 26, 2006
REPORT AND RECOMMENDATION TO THE HONORABLE JOHN F. KEENAN
I. Introduction
In this action, plaintiff Cablevision Systems of New York City Corporation ("Cablevision") alleges that defendant Juan Figueroa ("Figueroa") obtained cable programming services from Cablevision's cable television system without authorization in violation of the Cable Communications Policy Act, 47 U.S.C. §§ 553(a)(1) and 605(a). On December 26, 2002, following Figueroa's failure to respond to the complaint, Your Honor entered a default judgment and directed me to conduct an inquest regarding the damages, if any, to be awarded to Cablevision. (Docket No. 5).
Cablevision submitted its papers in support of its inquest damages on January 17, 2003. (Docket No. 7). Thereafter, on April 4, 2006, Cablevision filed supplemental papers. (Docket No. 8). By order dated April 24, 2006, I directed Figueroa to serve and file opposition papers on or before May 24, 2006. (Docket No. 9). To date, Figueroa has not submitted any opposition papers or contacted the Court.
For the reasons set forth below, I recommend that Cablevision be awarded damages in the amount of $13,453.56, consisting of statutory damages in the amount of $11,735.56, attorneys' fees in the amount of $1,508, and costs in the amount of $210.
II. Standard of Review
In light of Figueroa's default, Cablevision's well-pleaded allegations concerning issues other than damages must be accepted as true. See Cotton v. Slone, 4 F.3d 176, 181 (2d Cir. 1993);Greyhound Exhibitgroup, 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).
Additionally, although a plaintiff seeking to recover damages against a defaulting defendant must prove its claim through the submission of evidence, the Court need not hold a hearing as long as it has (i) determined the proper rule for calculating damages on the claim, see Credit Lyonnais Secs. (USA), Inc. v. Alcantara, 183 F.3d 151, 155 (2d Cir. 1999), and (ii) the plaintiff's evidence establishes, with reasonable certainty, the basis for the damages specified in the default judgment. See Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 111 (2d Cir. 1997).
III. Facts
The unrefuted allegations in Cablevision's complaint, together with its papers, establish the following:
Cablevision is a Delaware corporation with its principal place of business at 1111 Stewart Avenue, Bethpage, New York, and an office located at 930 Soundview Avenue, Bronx, New York. (Compl. ¶ 4). Cablevision is franchised by the City of New York to operate cable television systems within parts of the City of New York, including Bronx County where the defendant resides. (Id. ¶ 6).
Cablevision offers different tiers of programming service which subscribers can receive at monthly rates. (See Aff. of Donald Kempton, sworn to on Jan. 15, 2003 ("Kempton Aff."), ¶ 3). The fee for Cablevision's "basic" tier of service, which provides subscribers with mostly broadcast programming, is approximately $13.00 per month. (Id. ¶ 4). Cablevision also offers "premium" programming services, including access to such channels as Cinemax, Home Box Office and Showtime, ranging in cost from $40.75 to $80.95. (Id. ¶ 3; Compl. ¶¶ 7, 15). Finally, Cablevision offers "pay-per-view" programing, which allows subscribers to view special sporting events, concerts, and individual movies for a fee typically ranging from $4.00 to $49.99 per event. (Compl. ¶ 15).
Cablevision receives the signals for some of its programming, including all of its premium and pay-per-view programming, through over-the-air transmissions from orbiting satellites and local radio towers. (Id. ¶ 10). In an effort to guard against the theft of its services, Cablevision generally encrypts or "scrambles" the signals for its premium and pay-per-view services. (Id.; Kempton Aff. ¶ 9). A Cablevision customer who receives or intends to receive more than basic programming is provided with a programmable converter-decoder box which decodes the scrambled Cablevision services to which the customer has subscribed. (Compl. ¶ 10; Kempton Aff. ¶ 8).
Despite this scrambling technology, an individual may illegally intercept Cablevision's signals through the use of a "pirate" cable television converter-decoder in his or her home or business. (Compl. ¶ 14; Kempton Aff. ¶ 15). In this case, records obtained by Cablevision during the course of a separate investigation involving White Star Electronics, Inc., a/k/a Intek Electrical Services of Oklahoma City, Oklahoma ("Intek"), reveal that Figueroa purchased two pirate converter-decoders for $333 from Intek in November 1998. (Kempton Aff. ¶¶ 16, 21).
Since November 1998, Figueroa has resided in Apt. 9A at 803 East 182nd Street in the Bronx. (Compl. ¶ 5). At that location, Figueroa has continuously subscribed to Cablevision's basic service at a cost of $23.62 per month. (Kempton Aff. ¶ 20). Through the use of a pirate device, however, Figueroa had access to all of Cablevision's scrambled premium programming services as well as its pay-per-view services. (Id. ¶ 25).
IV. Discussion
A. Statutory Damages
Section 553(a)(1) of Title 47 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. § 553(a)(1).
Section 605(a) of Title 47 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.47 U.S.C. § 605(a).
While both statutes prohibit the unauthorized interception and reception of cable programming services, the two statutes are not coextensive. See Barnes, 13 F. Supp. 2d at 548. Section 553 applies only to cable transmissions while Section 605 also applies to radio communications. See Int'l Cablevision, Inc. v. Sykes, 75 F.3d 123, 133 (2d Cir. 1996) ("Section 605 applies to a considerable body of radio transmissions to which § 553 is inapplicable, while § 553 applies to any transmissions via cable, whether or not they originate as radio transmissions.");Cablevision Sys. New York City Corp. v. Lokshin, 980 F. Supp. 107, 112 (E.D.N.Y. 1997) ("In contrast to [S]ection 553, which by its statutory language applies only to transmissions via cable systems, [S]ection 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.") (internal citation and quotations omitted). Accordingly, where, as here, programming is received via a satellite cable system, both statutes apply.
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 only one of those sections. See Sykes, 75 F.3d at 127; Barnes, 13 F. Supp. 2d at 548. An aggrieved cable operator may, however, elect to recover damages under Section 605 to secure a higher damages award. Barnes, 13 F. Supp. 2d at 548.
The complaint in this case establishes that Figueroa installed two unauthorized "pirate" converter-decoders in his private residence for the purposes of descrambling Cablevision's encrypted premium and pay-per-view cable television signals. (Compl. ¶¶ 18-22; see also Kempton Aff. ¶¶ 21, 25). Furthermore, as a party possessing "proprietary rights" in the communications that Figueroa intercepted without authorization, Cablevision is an "aggrieved person" within the meaning of 47 U.S.C. §§ 553(c)(1) and 605(e)(3)(A).
Section 605 provides that a court may award an aggrieved person statutory damages "for each violation of subsection (a) . . . 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). Here, Cablevision seeks to recover the $10,000 maximum statutory damages allowable for each violation under Section 605, plus attorneys' fees and costs.
"The amount of damages to be awarded pursuant to Section 605 rests with the sound discretion of the court." Entm't by JJ, Inc. v. Mama Zee Rest. Catering Servs., Inc., No. 01 Civ. 3945 (RR) (SMG), 2002 WL 2022522, at *3 (E.D.N.Y. May 21, 2002). Some courts have calculated statutory damages based upon the monthly value of a defendant's unauthorized cable reception. Lokshin, 980 F. Supp. at 113 (finding award of $125 per month for pilfered pay-per-view services to be reasonable); Time Warner Cable of New York v. Rivera, No. 94 Civ. 2339 (JS)(SMG), 1995 WL 362429, at *4 (E.D.N.Y. June 8, 1995) (recommending approximately $1,000 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 (awarding Time Warner Cable $1,000 in statutory damages from each defendant).
Cablevision's submissions establish that Figueroa purchased two pirate converter-decoders in November 1998 and that the complaint was filed in June 2002. (Docket No. 1). During this time, Figueroa was authorized to view only channels included in Cablevision's basic level of service, for which he paid $23.62 per month. (Kempton Aff. ¶ 20). Therefore, Cablevision is entitled to statutory damages for the illegal use of converter-decoders calculated on the assumption that Figueroa misappropriated cable service for a period of 43 months. See, e.g., Cablevision Sys. New York City Corp. v. Diaz, No. 01 Civ. 4340 (GEL)(FM), 2002 WL 31045855, at *4 (S.D.N.Y. July 10, 2002).
During this period, because the cost of obtaining all of Cablevision's premium services was approximately $80 per month, (see Kempton Aff. ¶¶ 4, 20-21), Figueroa would have likely paid Cablevision $3,440 ($80 x 43 months) had he subscribed to those services. However, Figueroa in fact paid Cablevision only $1015.66 ($23.62 × 43 months). Thus, Cablevision's likely loss due to Figueroa's unauthorized access to premium programming is approximately $2,424.34 ($3,440-$1015.66).
In addition, although it is unlikely that Figueroa would have viewed every available pay-per-view event, it is reasonable to assume he would have purchased at least three minimum cost events per month. See Diaz, 2002 WL 31045855, at *4. This would have resulted in an additional monthly loss to Cablevision of $509.55 ($11.85 × 43) for the 43-month period during which Figueroa utilized the pirate decoder.
Thus, the total loss sustained by Cablevision due to the defendant's conduct is $2,933.89 ($2424.34 + $509.55). This sum, however, simply reflects "the amount that should have been paid" and, even if recovered from Figueroa, is unlikely to deter future illegal conduct of this kind. See Time Warner Cable of New York City v. Domsky, No. 96 Civ. 6851 (DAB)(RLE), 1997 WL 33374593, at *6 (S.D.N.Y. Sept. 2, 1999). For this reason, courts have often doubled the damages awarded for the use of a pirate decoder. See Cablevision Sys. New York City Corp. v. Sencion, No. 01 Civ. 7069 (SHS), 2001 WL 1586685, at *3 (S.D.N.Y. Dec. 12, 2001); Domsky, 1997 WL 33374593, at *6. In this case, it is appropriate to award Cablevision $5,867.78 (double the sum of $2,933.89) in damages for Figueroa's unauthorized use of pirate converter-decoder devices. Moreover, because Section 605 authorizes an award of damages for "each violation," Cablevision is entitled to recover $11,735.56 in statutory damages because Figueroa purchased two pirate decoder devices.
B. Attorneys' Fees
Section 605 authorizes a court to "direct the recovery of full costs, including the award of reasonable attorney's fees to an aggrieved party who prevails." 47 U.S.C. § 605(e)(3)(B)(iii). In this case, Cablevision alleges that it incurred attorneys' fees and costs in the amount of $2,218 in the course of prosecuting this action. (See Aff. of Michael D. Cassell, Esq., dated Apr. 4, 2006 ("Cassell Aff."), ¶ 15).
Of this amount, two tasks were billed at a flat rate rather than on a per-hour basis: the drafting of the complaint ($300) and the drafting of all papers related to the default judgment ($200). (Id. ¶ 7). Melinda M. Dus, Esq. ("Dus"), an associate at Lefkowitz, Louis, Sullivan Hogan, LLP, with two years of experience, drafted the default application. (Id. ¶ 4). Cablevision was billed $1,276 for Dus' services other than drafting the default application (8.8 hours at a rate of $145 per hour). (Id. ¶ 12 Ex. E). Jennean R. Lee, Esq. ("Lee"), also an associate at the firm with two years of experience, drafted the complaint. (Id. ¶ 5). Cablevision was billed $232 for Lee's services other than the drafting of the complaint (1.6 hours at a rate of $145 per hour). (Id. ¶ 13 Ex. F). Cablevision asserts that it is entitled to recover the costs of the flat-billed tasks as well as the hourly-billed tasks charged to Cablevision. (See Pl.'s Suppl. Mem. at 10-11).
Cablevision's claim for reimbursement of $800 for drafting the memorandum in support of the inquest has been withdrawn. (Id. n. 3).
Second Circuit precedent requires a party seeking an award of attorneys' fees to 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, 1148 (2d Cir. 1983). Fee applications that do not contain such supporting data "should normally be disallowed." Id.; see also Kingvision Pay-Per-View, Ltd. v. The Body Shop, No. 00 Civ. 1089 (LTS)(KNF), 2002 WL 393091, at *5 (S.D.N.Y. Mar. 13, 2002) (denying attorneys' fees because, even though requested amount of $1,000 was reasonable, detailed documentation was not provided).
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 Conf. Pension Ret. Fund, 831 F.2d 407, 409 (2d Cir. 1987).
In the present case, the $1,508 billed to Cablevision for the hourly-based work of Dus and Lee is reasonable and should be awarded.
The remaining legal fees in the amount of $500 were billed on a flat-rate basis. In prior similar cases, I have recommended that the Court disallow requests for recovery of flat-billed tasks for failure to comply with the requirements of Carey. See Diaz, 2002 WL 31045855, at *5; Cablevision Sys. New York City Corp. v. Digesu, No. 01 Civ. 4296 (DAB)(FM) (S.D.N.Y. June 11, 2003). Cablevision submits that "recent case law addressing this exact issue has found that it is completely appropriate to recommend an award of attorneys' fees for flat-billed tasks." (Pl.'s Suppl. Mem. at 10-11). The only authority cited by Cablevision in support of its argument is the Report and Recommendation in CSC Holdings, Inc. v. Khrisat, No. 04 Civ. 8592 (LBS)(RLE), 2005 WL 3030838, at *5 (S.D.N.Y. Nov. 8, 2005). There, Magistrate Judge Ellis acknowledged that "other courts in this district have disallowed recovery of pre-arranged flat fees," but found that the records submitted were detailed enough for the court to make "an assessment of a reasonable lodestar amount." Id.
The Digesu action apparently settled shortly after the Court issued its Report and Recommendation. (See Pl.'s Supp. Mem. at 8 n. 2).
I am not persuaded by Khrisat. Cablevision may, of course, limit its attorneys' fees for particular tasks to a fixed rate. To comply with Carey, however, Cablevision should track the time spent on such tasks, even if that time is not actually charged. In this manner, Cablevision will be able to recover the fees that it actually has been charged without asking the Court to ignore Carey.
I note that computerized billing systems often allow the user to input alternate billing rates for time keepers. The use of a $0.0 alternate rate for attorneys performing flat rate work will presumably enable Cablevision to demonstrate the reasonableness of the prices it has negotiated without placing any undue burden on its counsel.
C. Costs
Cablevision also seeks to recover $210 in costs, consisting of $60 for the service of process and $150 for the fee to file this action. (Cassell Aff. ¶ 14). These charges are properly taxable as costs. See Local Civ. R. 54.1.
V. Conclusion
For the reasons set forth above, I recommend Cablevision be awarded damages, including attorneys' fees and the costs incurred in prosecuting this action, in the amount of $13,453.56 ($11,735.56 + $1,508 + $210).
VI. 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 John F. Keenan, United States District Judge, and to the chambers of the undersigned, at the United States Courthouse, 500 Pearl Street, New York, New York, 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 Keenan. The failure to file timely objections will result in a waiver of those objections for the 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).