Opinion
No. 02 Civ. 2912 (RJH)(KNF).
June 3, 2005
REPORT AND RECOMMENDATION
TO THE HONORABLE RICHARD J. HOLWELL, UNITED STATES DISTRICT JUDGE. I. INTRODUCTION
In this action, Cablevision Systems New York City Corporation ("Cablevision") alleges that Gertha Guignard ("Guignard") intercepted cable television programming signals illegally, in violation of the Cable Communications Policy Act, as amended, 47 U.S.C. §§ 553(a)(1) and 605(a).
Upon Guignard's failure to file an answer or otherwise respond to the Complaint, United States District Judge Shira A. Sheindlin ordered that a default judgment be filed against her. Thereafter, Judge Sheindlin referred the matter to the undersigned to conduct an inquest and to report and recommend the amount of damages, if any, to be awarded against Guignard.
The Court directed Cablevision to serve and file proposed findings of fact and conclusions of law, and an inquest memorandum setting forth its proof of damages, costs of this action, and its attorneys' fees. The Court also directed Guignard to serve and file any opposing memoranda, affidavits and exhibits, as well as any alternative findings of fact and conclusions of law she deemed appropriate. Guignard did not file any papers in opposition to Cablevision's submissions. In November 2003, this case was reassigned to your Honor.
Cablevision's submissions aver that it is entitled to $10,000 in statutory damages and $1,284 in attorneys' fees. For the reasons that follow, I recommend that Cablevision be awarded $11,284: statutory damages of $10,000, pursuant to 47 U.S.C. § 605, and attorneys' fees of $1,284.
II. BACKGROUND AND FACTS
When a defendant defaults in an action, by failing to plead or otherwise defend against a complaint, the defendant is deemed to have admitted every well-pleaded allegation of the complaint except those relating to damages. 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). In addition, the plaintiff is entitled to all reasonable inferences from the evidence presented. See Au Bon Pain Corp. v. Artect, Inc., et al., 653 F.2d 61, 65 (2d Cir. 1981). Based upon the submissions made by the plaintiff, the complaint filed in the instant action, and the Court's review of the entire court file in this action, the following findings of fact are made:
Cablevision is a Delaware corporation which is authorized to do business in New York and has its principal offices in Bethpage, New York and Bronx, New York. See Complaint, ¶ 4, at 2. Guignard is an individual residing at 2075 St. Raymonds Avenue, Apt. 2C, Bronx, New York. See Plaintiff's Memorandum of Law in Support of Inquest ("Pl.'s Mem."), at 2. Pursuant to a franchise awarded by the State of New York, Cablevision constructs, operates and maintains cable television systems in Bronx County, where Guignard resides. See id.
Cablevision provides cable television services to subscribers who request and pay for them. See Affidavit of Donald Kempton in Support of Damages ("Kempton Aff."), ¶ 2, at 1. Cablevision offers different tiers of programming services to its subscribers. "Basic" service is offered at a monthly rate, and provides a residential subscriber with enhanced quality reception of broadcast stations, as well as a small number of additional programming services. See id., ¶ 3, at 1. "Family" service is a higher level of service, which provides a subscriber with all of Cablevision's programming services except for its "premium" and pay-per-view programming services. See id., ¶ 3, at 1-2.
Cablevision's residential subscribers may also subscribe to one or more premium services such as Cinemax, Home Box Office, and Showtime, for an additional monthly charge per service. Premium services range in price from approximately $1.95 to $14.95 per month per service. See id., ¶ 4, at 2. The full range of Cablevision's premium programming channels, not including pay-per-view events, is offered to residential subscribers at an average cost of approximately $80.95 per month. See id.
Subscribers may also order pay-per-view programming services. Pay-per-view programming includes movies and sporting events, fees for which are charged on a per-event basis. See id., ¶ 5, at 2. The pay-per-view service includes selections which typically range in price from approximately $4.00 to $49.95 per selection, and are offered continuously over a 24-hour period. The aggregate value of the pay-per-view events offered over a typical month, assuming each pay-per-view event is viewed only once, is approximately four hundred dollars. See id.
Cablevision provides its cable television service to subscribers via subscription agreements. Cablevision agrees to provide the services requested by a subscriber in exchange for the subscriber's agreement to pay for those services on a monthly basis. See id., ¶ 6, at 2. Each Cablevision subscriber is entitled to receive only the level and amount of cable programming and services for which that subscriber has paid.See id., ¶ 7, at 2-3.
As part of its cable service, Cablevision provides each subscriber with equipment known as a converter-decoder. Cablevision programs the converter-decoder so that each subscriber can receive and view only the level and amount of cable programming he or she has selected and purchased. The rental fee for the converter-decoder is regulated by the Federal Communications Commission on an actual cost basis. The fee is included in the subscriber's monthly bill. See id., ¶ 8, at 3.
Cablevision receives the signals for most of its cable television programming services from orbiting satellites and local radio towers. See id., ¶ 9, at 3. In order to protect its cable programming from theft and unauthorized reception — commonly known as cable "piracy" — Cablevision encrypts or "scrambles" the signals to all programming which a subscriber has not purchased and is not authorized to receive. See id., ¶¶ 9, 13, at 3-4. When Cablevision's programming is in a scrambled mode, it is distorted and unviewable by a subscriber who has not paid for such programming. See id., ¶ 9, at 3. Scrambling is one of the principal security measures used by Cablevision and other cable television operators to prevent cable piracy. See id., ¶ 13, at 4.
Either by technical modification or computer command, Cablevision programs the converter-decoders provided to its subscribers to descramble reception of only those programming channels which a subscriber has purchased. See id., ¶ 10, at 3. The converter-decoders which Cablevision provides to its subscribers have a technology feature and function known as "addressability." Addressability is a communication link between a cable operator's central computer and the descrambling computer circuitry in each converter-decoder. See id., ¶ 11, at 4.
There is a "black market" industry of various manufacturers, vendors and distributors of "pirate" converter-decoders. These "pirate" converter-decoders are sold to individuals who use the devices to avoid paying a cable operator's subscription fees for the authorized reception of premium and pay-per-view cable television programming. A cable operator's authorized converter-decoder can also be modified into a "pirate" converter-decoder by inserting unauthorized integrated circuits, commonly known as "chips," into that device, or by electronically reprogramming the device. "Pirate" converter-decoders allow their users to descramble all scrambled premium and pay-per-view cable television programming, regardless of whether such services have been paid for or whether the user is authorized to receive such programming. With a "pirate" converter-decoder, the addressability technology is disabled so that the cable operator is unable to communicate with the "pirate" converter-decoder or even recognize that it has been attached to its cable system.See id., ¶¶ 14-15, at 4-5.
Guignard became a Cablevision subscriber on December 20, 1991.See id., ¶ 20, at 6. At that time, she subscribed to Cablevision's Rainbow Gold level of service, the highest level of service available. On June 14, 1996, Guignard decreased her level of service to the Family level. See id.
Soon thereafter, on or about June 27, 1996, Guignard purchased one "pirate" converter-decoder from Bears Bows, Inc. d/b/a Millennium Enterprises ("Millennium"), permitting the viewing of Cablevision's premium and pay-per-view programming services without authorization or payment. See id., ¶ 21, at 6. There is no legitimate function or purpose for converter-decoders which have been designed to descramble all scrambled programming, including pay-per-view events. The sole purpose of such devices is to enable their users to receive unauthorized cable television programming without having to pay for that programming. See id., ¶ 24, at 7.
As a result of an investigation conducted by Showtime Networks, Inc., a cable television programming service provider, Cablevision was able to obtain a list of every person or entity that purchased "pirate" converter-decoders from Millennium. The information obtained by Cablevision from Millennium's records revealed the transaction between Millennium and Guignard. See id., ¶¶ 15, 17, at 5-6; see also Plaintiff's Memorandum of Law, Exhibit C.
III. CONCLUSIONS OF LAW
47 U.S.C. §§ 553 and 605 both prohibit the unauthorized interception and reception of cable programming services which originate and are delivered via satellite or by other means of over-the-air signal transmission. See Time Warner Cable of New York City v. Barnes, 13 F. Supp. 2d 543, 547-48 (S.D.N.Y. 1998) (citing International Cablevision, Inc. v. Sykes Noel, 75 F.3d 123, 133 [2d Cir. 1996]); Cablevision Systems New York City Corp. v. Lokshin, 980 F. Supp. 107, 112 (E.D.N.Y. 1997).
47 U.S.C. § 553(a) provides, in pertinent part, that:
No person shall intercept or receive . . . any communications service offered over a cable system, unless specifically authorized to do so by a cable operator or as may otherwise be specifically authorized by law.47 U.S.C. § 553(a)(1).
47 U.S.C. § 605 provides, inter alia, that:
No person not being authorized by the sender shall intercept any radio communication and divulge or publish the . . . contents . . . of such intercepted communication to any person.47 U.S.C. § 605(a).
"In contrast to section 553, which by its statutory language applies only to transmissions via cable systems, section 605(a) applies to 'the interception of cable-borne, as well as over-the-air, pay television' where cable-borne transmissions originate as satellite transmissions." Lokshin, 980 F. Supp. at 112 (quoting Sykes, 75 F.3d at 130). Therefore, "when pay television programming is transmitted over both cable and satellite mediums, both statutes apply . . ." Lokshin, 980 F. Supp. at 112 (citing Sykes, 75 F.3d at 130).
Cablevision's premium and pay-per-view programming signals are sent to Cablevision from orbiting satellites and radio towers.See Kempton Aff., ¶ 9, at 3. Accordingly, Cablevision's cable programming services are protected from unauthorized reception under 47 U.S.C. § 605(a). See Barnes, 13 F. Supp. 2d at 548 (citations omitted).
Guignard purchased a "pirate" converter-decoder from Millennium. See Kempton Aff., ¶ 21, at 6. This device permits its users to view Cablevision's premium and pay-per-view television programming without authorization. See id., ¶ 22, at 6-7. Since the defendant was previously provided with an authorized converter-decoder from Cablevision, it is reasonable to conclude that her purpose in purchasing "pirate" equipment from Millennium was to receive unauthorized cable television programming. In any event, the defendant's default has left the Court without any factual basis upon which to reach an alternative conclusion respecting her use of the converter-decoder she purchased from Millennium. In light of the above, the Court finds that the defendant violated 47 U.S.C. §§ 553(a)(1) and 605 (a).
Cablevision possesses "proprietary rights" in the communications which Guignard intercepted, and is thus a "person aggrieved" within the meaning of 47 U.S.C. §§ 553(c)(1) and 605(e)(3)(A).
When a court determines that a defendant's conduct has violated both 47 U.S.C. §§ 553 and 605, a plaintiff may recover damages under only one of those sections. Barnes, 13 F. Supp. 2d at 548; American Cablevision of Queens v. McGinn, 817 F. Supp. 317, 320 (E.D.N.Y. 1993). For violations of both sections 553 and 605, an aggrieved cable operator may elect to recover damages under section 605 in consideration of section 605's higher damages award. Barnes, 13 F. Supp. 2d at 548 (citations omitted).
Cablevision has elected to recover statutory damages against Guignard, rather than actual damages. Section 605(e)(3) authorizes the Court to award statutory damages 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).
Cablevision avers that the defendant's default has prevented Cablevision from discovering evidence establishing how long she received unauthorized programming services. See Pl.'s Mem., at 8. Cablevision, therefore, seeks an award of statutory damages in the amount of $10,000.
Guignard became a Cablevision subscriber on December 20, 1991; on that date, she subscribed to the "Rainbow Gold" level of service. On June 14, 1996, she downgraded the level of her programming service to the "Family" level of service. She purchased a "pirate" converter-decoder from Millennium on or about June 27, 1996. On July 30, 2001, Guignard added Starz and Encore, two premium networks, to her "Family" level programming package. See Kempton Aff., ¶ 20, at 6. The addition of these premium networks, for a monthly fee, suggests that Guignard had ceased use of the "pirate" converter-decoder, as the "pirate" device allows the user to receive all premium and pay-per-view programming free of charge. Therefore, the Court finds that Guignard's unauthorized usage encompassed approximately 61 months (from the date of the purchase of the converter-decoder device in 1996, until the date on which Guignard added the Starz and Encore networks in 2001).
The record reflects that the full range of Cablevision's premium programming channels, not including pay-per-view events, is offered to residential subscribers at an average cost of $80.95 per month. See id., ¶ 4, at 2. Guignard subscribed to the "Family" level of service for approximately 61 months, from June 14, 1996, to July 30, 2001. Since the monthly subscriber fee for the "Family" level of service was approximately $40 per month, it is reasonable to conclude that, during this period, Guignard was receiving unauthorized free access to programming valued at $40.95 per month. See id. Accordingly, $2,497.95 in unpaid programming fees was lost by Cablevision.
The aggregate value of all pay-per-view events offered over a typical month, assuming each pay-per-view event is viewed only once, is approximately four hundred dollars per month. See id., ¶ 5, at 2. However, to conclude that Guignard watched each and every pay-per-view selection offered, on each day during the 61-month period, is unreasonable.
Cablevision's pay-per-view events range in cost from approximately $4.00 to $49.95 per selection. Based on these costs, the Court finds that an average value of $125 per month for the defendant's unauthorized free access to Cablevision's pay-per-view events is appropriate. See, e.g., Lokshin, 980 F. Supp. at 113 (finding award of $125 per month for unauthorized pay-per-view services to be reasonable). Under these circumstances, $7,625 is the reasonable value of the pay-per-view selections Guignard might have viewed without making payment to Cablevision. This sum takes into consideration Guignard's 61 months of unauthorized usage. In reaching this determination, the Court also considers Guignard's failure to appear in this action, which illustrates her indifferent attitude toward the communications law. See Cablevision Systems New York City Corp. v. Faschitti, No. 94 Civ. 6830, 1996 WL 48689, at *2 (S.D.N.Y. Feb. 7, 1996) (citing Cable/Home Communication Corp. v. Network Prods., Inc., 902 F.2d 829, 852 [11th Cir. 1990] [recognizing goal of deterrence and noting that court may consider party's attitude in determining statutory damages award]).
Therefore, the total value of cable programming services intercepted illegally by Guignard is approximately $10,122.95 ($2,497.95 for unauthorized premium programming plus $7,625 for unauthorized pay-per-view programming). Accordingly, the Court finds that plaintiff is entitled to $10,000, pursuant to 47 U.S.C. § 605, for the defendant's use of a "pirate" decoding device to intercept illegally plaintiff's cable television programming services.
47 U.S.C. § 605 authorizes a court to "direct the recovery of full costs, including the award of reasonable attorneys' fees to an aggrieved party who prevails." 47 U.S.C. § 605(e)(3)(B)(iii).
When fixing a reasonable rate for attorneys' fees, it is appropriate for a court to consider and to apply the prevailing market rates in the relevant community for similar legal work of lawyers of reasonably comparable skill, experience, and reputation. See Blum v. Stenson, 465 U.S. 886, 895 n. 11, 104 S. Ct. 1541 n. 11 (1984). In addition, it is permissible for a court to rely upon its own knowledge of private firm hourly rates in deciding what reasonable attorneys' fees are in the community.Miele v. N.Y. State Teamsters Conf. Pens. Ret. Fund, 831 F.2d 407, 409 (2d Cir. 1987).
In the Second Circuit, a party seeking an award of attorneys' fees must support that request with contemporaneous time records that show, "for each attorney, the date, the hours expended, and the nature of the work done." New York State Ass'n for Retarded Children, Inc. v. Carey, 711 F.2d 1136, 1154 (2d Cir. 1983). Attorney fee applications that do not contain such supporting data "should normally be disallowed." Id. at 1154.
In prosecuting this action against Guignard, Cablevision engaged the service of the law firm Lefkowitz, Louis Sullivan, L.L.P. Melinda M. Dus ("Dus"), an attorney with that firm, submitted an affirmation to the Court setting forth: (a) the names of the attorneys and paralegals who worked on this matter; (b) the professional experience of those persons; (c) the number of hours each person devoted to this action; and (d) the nature of the work each person performed. In addition, Dus averred that certain work done by attorneys and paralegals of the law firm was performed at a set fee, pursuant to a fee schedule previously agreed upon by plaintiff and its counsel.
Contemporaneous time records for the relevant law firm personnel were submitted to the Court. The time records indicate that plaintiff incurred attorneys' fees through the work performed by the following law firm personnel:
Jennean R. Lee, Esq.: 0.8 hours @ $145 per hour Draft Complaint @ $300
Melinda M. Dus, Esq.: Draft Inquest Papers @ $600
Susan A. Weindler, Paralegal: 0.4 hours @ $85 per hour
Alfonso N. Cava, Paralegal: 0.4 hours @ $85 per hour Draft Default Papers @ $200
Based upon the nature of this case, the Court's review of the submissions by Cablevision, which outline the services performed by counsel, and the Court's understanding of the hourly rates charged by private law firms in the community, the Court concludes that $1,284 in attorneys' fees was reasonably incurred by Cablevision in connection with prosecuting this action against Guignard.
IV. RECOMMENDATION
For the reasons set forth above, the Court recommends an award to Cablevision of $11,284 for damages and attorneys' fees incurred in prosecuting this action against Guignard.
* * *
Plaintiff shall serve defendant Guignard with a copy of this Report and Recommendation and submit proof of service to the Court.
V. FILING OBJECTIONS TO THIS REPORT AND RECOMMENDATION
Pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure, the parties have ten (10) days from service of the 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 Court, with courtesy copies delivered to the chambers of the Honorable Richard J. Holwell, United States District Judge, 500 Pearl Street, Room 1950, New York, New York 10007, and to the chambers of the undersigned, 40 Centre Street, Room 540, New York, New York 10007. Any requests for an extension of time for filing objections must be directed to Judge Holwell. FAILURE TO FILE OBJECTIONS WITHIN TEN (10) DAYS WILL RESULT IN A WAIVER OF OBJECTIONS AND WILL PRECLUDE APPELLATE REVIEW. See Thomas v. Arn, 474 U.S. 140 (1985); IUE AFL-CIO Pension Fund v. Herrmann, 9 F.3d 1049, 1054 (2d Cir. 1993); Frank v. Johnson, 968 F.2d 298, 300 (2d Cir. 1992); Wesolek v. Candair Ltd., 838 F.2d 55, 57-59 (2d Cir. 1998); McCarthy v. Manson, 714 F.2d 234, 237-38 (2d Cir. 1983).