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finding default willful where defendant never responded to complaint, appeared, or explained default
Summary of this case from Janus v. Regalis Constr., Inc.Opinion
No. 01 Civ. 9515 (LTS)
July 26, 2002
MEMORANDUM OPINION AND ORDER
This matter comes before the Court on the unopposed motion of Plaintiff Cablevision Systems of New York City Corporation ("Cablevision") for an order granting it a default judgment against Defendant Flora Leath. Plaintiff brings this action under sections 553 and 605 of United States Code, title 47 (the "Communications Act"), alleging that Defendant violated the Communications Act by using a "pirate" converter-decoder to intercept and descramble authorized cable television programming, for which Cablevision owned franchises throughout the City of New York, including Defendant's place of residence. Cablevision seeks statutory damages and reasonable attorney's fees pursuant to the Communications Act.
The Court has thoroughly reviewed all submissions related to this motion and the decision rendered reflects such consideration. For the following reasons, Plaintiffs motion is granted, and damages and costs are awarded to the extent set forth below.
Cablevision filed its complaint on October 26, 2001. The record reflects that, on December 27, 2001, Cablevision filed with the Court an affidavit of service of the Summons and Complaint. The affidavit states that Defendant personally received the Summons and Complaint at her usual place of abode on December 17, 2001. (Pl.'s Ex. B.) The Federal Rules of Civil Procedure require a defendant to respond within 20 days after being served with the Summons and Complaint. See Fed.R.Civ.P. 12(a)(1)(A). On February 11, 2002, the Court granted Cablevision permission to make a motion for default judgment, as Defendant has failed to file an answer or make any appearance before the Court in connection with this case. On April 8, 2002, Cablevision filed and served with the Court its motion for a default judgment pursuant to Rule 55(a) of the Federal Rules of Civil Procedure. The motion was accompanied by an affidavit setting forth pertinent facts, several exhibits, and a memorandum of law. Defendant did not respond to the motion. The pertinent facts are as follows.
FACTS
Cablevision is a cable television operator that has been awarded franchises by the City of New York authorizing it to construct, operate and maintain cable television systems in parts of New York City, including Defendant's residence. (Carroll Aff., sworn to on March 19, 2002, ¶ 2.) Cablevision offers different types of programming services, including "Basic," "Family," and "Optimum" services. (Id. ¶ 3.) Cablevision charges different monthly rates depending on the level of service. Subscribers may also receive "premium" programming for an additional monthly charge ranging between $1.95 and $14.95 per month per service. (Id. ¶ 4.) Cablevision also offers pay-per-view programming, which allows subscribers to purchase individual movies, sporting events or other entertainment for a per-event charge over and above the monthly fee ranging from, $4.95 to $49.95 per selection. Pay-per-view selections run continuously over a 24-hour period. (Id.) Cablevision includes in its service to each subscriber a converter-decoder or "cable-box," which Cablevision programs so that each subscriber receives only the service that he or she purchased and is authorized to receive. (Id. ¶ 8.)
Basic" service provides the subscriber with enhanced quality reception of broadcast channels and a small number of additional programming services. (Carroll Aff. ¶ 3.) "Family" service provides subscribers with all of Cablevision's programming except "premium" and pay-per-view programming. (Id.) "Optimum" programming provides all of the "Family" service programming plus certain premium channels. (Id.)
The aggregate value of the pay-per-view events offered over a typical month, assuming that each event is viewed once, is hundreds of dollars. (Carroll Aff. ¶ 5.)
Cablevision receives the signals for its cable television programming from both satellites and radio towers. (Id. ¶ 9.) To protect its programming from theft and unauthorized use, Cablevision encrypts or "scrambles" the signals to all programming. When scrambled, programming is distorted and not-viewable. (Id.) Cablevision separately programs each of the cable-boxes it gives to its subscribers so that the cable-box only descrambles the channels that the subscriber has purchased. (Id. ¶ 10.) Cablevision uses scrambling as its principal measure of security.
Each cable-box features technology known as "addressability." This addressability enables the cable operator's central computer to communicate with the descrambling and computer circuitry in each cable-box (Id. ¶ 11.) Through the addressability technology, the cable operator may send signal commands to the cable-box to descramble and to resume scrambling particular programs that the subscriber purchases through the pay-per-view service. Cable operators can also change the authorized level of service for each subscriber without physically altering the cable-box or its circuitry. (Id. ¶¶ 11, 12.)
Defendant first became a Cablevision subscriber on January 25, 1994. (Id. ¶ 17.) On January 4, 2001, one of Cablevision's technicians visited Defendant's residence in the Bronx for a routine service call, during which call the technician discovered a "pirate" converter decoder, or "pirate-box." (Id. ¶ 16.) The technician tested the pirate-box by turning on the power to the device and tuning to the channels that Defendant was not authorized to receive. The technician was able to watch all of the premium and pay-per-view channels in a clear, unscrambled picture. (Id.) The technician removed the device and Defendant signed a receipt acknowledging the same. (Id.) At that time, Defendant subscribed only to Cablevision's "Family" level of service at a monthly cost of $49.95 (Id. ¶ 17), and Cablevision offered seven premium channels at an average of $11.95 per month. (Id. ¶ 22.)
Cable subscribers can purchase these pirate-boxes on the "black market." The pirate-boxes allow the cable subscriber to view all of the cable service provider's programming, including premium and pay-per-view services, by descrambling all of the signals sent to the receiver. (Carroll Aff. ¶ 14, 15.) Further, the pirate-box interferes with the addressability feature, so the cable operator cannot communicate with the authorized cable box. (Id.)
Cablevision has provided no evidence showing that Defendant ever downgraded her service.
DISCUSSION
In deciding a motion for default judgment, the Court considers three factors: 1) whether Defendant's default was willful; 2) whether Defendant has a meritorious defense to Plaintiffs claims; and 3) the level of prejudice the non defaulting party would suffer as a result of the denial of the motion for default judgment. See Mason Tenders District Council v. MM Contracting Consulting, 193 F.R.D. 112, 114-15 (S.D.N.Y. 2000). Dispositions of motions for default judgments are left to the sound discretion of the district court. See Shah v. New York State Dep't of Civil Service, 168 F.3d 610, 615 (2d Cir. 1999).
"[T]he core function of service is to supply notice of the pendency of a legal action, in a matter and a time that afford the defendant a fair opportunity to answer the complaint and present defenses and objections."Henderson v. United States, 517 U.S. 654, 672 (1996), quoting in Citadel Management, Inc. v. Telesis Trust. Inc., 123 F. Supp.2d 133, 145 (S.D.N.Y. 2000). An entry of default judgment should be made only where there was willful default, such that the failure to answer was more than mere negligence or carelessness. See SEC v. McNulty, 137 F.3d 732, 738 (2d Cir. 1998). In light of the circumstances previously outlined, the Court finds that Defendant, having failed to respond, in any way, to the Summons and Complaint or otherwise make an appearance in this action and having failed to provide any explanation for her failure to defend, has defaulted willfully. Since Defendant has failed to proffer any defense and is therefore deemed to have admitted the well-pleaded allegations of the Complaint, other than those as to the amount of damage see Fed.R.Civ.P. 8(d), the second factor — whether Defendant has a meritorious defense — is not at issue.
Cablevision has documented proper service of its detailed complaint and of its motion papers. In light of Defendant's failure to respond, there is no indication that requiring Cablevision to take further steps prior to a determination on the merits would be effective in eliciting a response from Defendant. Under these circumstances, denial of the motion would be unfairly prejudicial to Cablevision.
Cablevision's Claim for Damages
Section 553(a)(1) of the Communications Act provides in pertinent part that "[n]o person shall intercept or receive . . . any communications service offered over a cable system unless specifically authorized to do so by a cable operator." 47 U.S.C. § 553 (a)(I) (West 2001). The aggrieved party may bring a civil suit pursuant to subsection (c). The Court may then award injunctions, damages, attorney's fees and costs. 47 U.S.C. § 553 (c). The aggrieved party may elect to recover actual damages, 47 U.S.C. § 553 (c)(3)(A)(i), or the party may recover statutory damages. 47 U.S.C. § 553 (c)(3)(A)(ii). The Court may award statutory damages of no less than $250 and no more than $10,000 "as the Court considers just." Id.
Section 605(a) of the statute provides in pertinent part that "[n]o person not being authorized by the sender shall intercept any radio communication and divulge or publish the existence, contents, substance, purport, effect or meaning of such intercepted communication to any person." 47 U.S.C. § 605 (a) (West 2001). Pursuant to subsection 605(e)(3)(C)(ii), the aggrieved party may elect to recover actual damages, or statutory damages for each violation in the amount of no less than $1,000 and no more than $10,000 "as the court considers just." 47 U.S.C. § 605 (e)(C)(3)(ii). Cablevision receives its signals, including those for premium and pay-per-view service, from orbiting satellites and radio signals, prior to transmitting the signals through coaxial cable. (Carroll Aff. ¶ 9.) Thus, Cablevision's rights to the signals are protected by section 553, concerning cable system communications, and section 605, concerning the radio and satellite communications. See International Cablevision. Inc. v. Sykes, 75 F.3d 123, 132-33 (2d Cir. 1996). Therefore, when Defendant installed the pirate-box and received all of Cablevision's signals, including premium and pay-view signals, in an unscrambled mode without Cablevision's authorization, she violated both sections 553 and 605.
Where a defendant is liable under both section 553 and section 605, a plaintiff is entitled to have damages awarded under section 605, which provides for greater recovery than section 553. Time Warner Cable of New York v. Fland, No. 97 Civ. 7197 (BSJ) (SEG), 1999 WL 1489144 at *3 (S.D.N.Y. 1999). Cablevision seeks to recover $10,000 in statutory damages pursuant to section 605, claiming that Defendant's default prevents Cablevision from discovering the length of time that Defendant used the pirate-box. Citing Time Warner Cable of New York v. Olmo, 997 F. Supp. 585, 589 (E.D.N.Y. 1997), Cablevision claims that an aggrieved party is entitled to recover the higher ranges of damages when the defendant violates both 553 and 605. (Pl.'s Mem. Def. J. at 5.)Olmo, however, involves the distribution of pirate-boxes that were yet unrecovered at the time of the decision. In addition, Olmo involved private financial gain, as defendant Olmo had sold and distributed the pirate-boxes rather than using them solely for personal purposes in his residence. Olmo, 997 F. Supp. at 589. In the instant case, Defendant's pirate-box is no longer in circulation because it was turned over to Cablevision during the service visit (Carroll Aff. ¶ 16), thus mitigating the damages.
A plaintiff cannot recover under both section 553 and 605.Kingvision v. Papacito Lidia Luncheonette, No. 01 Civ. 7575 (LAK)(AJP), 2001 WL 1558269 at *2 (S.D.N.Y. 2001); Kingvision v. New Paradise Rest., No. 99 Civ. 10020 (WHP) (AJP), 2000 WL 378053 at *2 (S.D.N.Y. 2000); Time Warner Cable v. Evans, No. 00 Civ 1385 (DAB), 2001 WL 1241756 at *4 (S.D.N.Y. 2001).
See Charter Communications Entertainment I, LLC v. Shaw, 163 F. Supp.2d 121 (D. Conn. 2001), in which the court held that a mitigating factor in determining the damages was whether the or not the pirate device had been turned over to the company or was still in circulation being used to steal service. Id. at 125.
Courts in this Circuit have adopted two approaches to determine damages in cases of unauthorized descrambling of signals by residential subscribers to cable television services. Some courts have based the awards on the difference between the amount of service for which defendants paid monthly and the amount their unauthorized use enabled them to receive during that time. See, e.g., Time Warner Cable of New York City v. Brown, No. 97 Civ. 3411 (DLC)(NRB) (S.D.N.Y. August 5, 1998), Cablevision Systems New York City Corp. v Loshkin, 980 F. Supp. 107, 113 (E.D.N.Y. 1997). Others have awarded a flat sum based upon the court's determination of the damages appropriate given the factual circumstances of the case. See e.g., Time Warner Cable of New York v. Barnes, 13 F. Supp.2d 543, 548 (S.D.N.Y. 1998).
d The plaintiff has demonstrated that Defendant was able to receive unauthorized premium and pay-per-view programming through a pirate-box in violation of 47 U.S.C. § 553 and 605. The average purchase price of the seven premium services alone, over the course of a single year, would have exceeded $1,000. There is, however, no evidence as to when Defendant began to use the box, and Defendant has returned the pirate-box, mitigating Plaintiffs damages. The Court finds that an award of statutory damages in the amount of $1,000 is appropriate in light of the totality of the circumstances of this case. See Barnes, 13 F. Supp.2d at 548 (plaintiff proved the defendant's purchase of the pirate-box, but the court had limited information as to the defendants' misconduct; thus, it awarded damages of $1,000 against each defendant).
Reasonable Attorney's Fees
Section 605 also mandates that the Court "direct the recovery of full costs, including reasonable attorney's fees to an aggrieved party who prevails." 47 U.S.C. § 605(e)(3)(B)(iii). In New York State Ass'n for Retarded Children, Inc. v. Carey, 711 F.2d 1136 (2d Cir. 1983), the Second Circuit held that a party seeking an award of attorney's fees must support its request by contemporaneous time records that show "for each attorney, the date, the hours, expended and the nature of the work done."Id. at 1154. Cablevision requests $1,702 in attorney's fees and costs. (Pl.'s Mem. Default J. at 6.) Plaintiff has submitted the contemporaneous time records for all work billed regarding this case. (Pl.'s Ex. C-H.) William Primavera's Affirmation in Support of Inquest offers a detailed account of its attorney's fees, which are supported by contemporaneous time sheets. (Primavera Aff. ¶¶ 3-14; Pl.'s Ex. C-H.). The Court find the accounts to be accurate and reasonable, and so awards Cablevision $1,522 in attorney's fees as well as $180 in costs for service and filing fees.
In the Primavera affirmation, affiant asserts that Alfonso N. Cava worked for 1.40 hours at a billable rate of $85 for a total of $68. (Primavera Aff ¶ 13.) However, the Cava time sheets show that Cava worked for 0.8 hours at a billable rate of $85 for a total of $68. (Pl.'s Ex. G.)
CONCLUSION
Judgment shall be entered in favor of Plaintiff and against Defendant Flora Leath for $1,000 in statutory damages pursuant to 47 U.S.C. § 605 plus $1,702 in attorney's fees and costs.
IT IS SO ORDERED.