Summary
recommending statutory damages based on $54.95 residential rate for each of the 40 patrons who could have viewed the prize fight based on the establishment's capacity
Summary of this case from Kingvision Pay-Per-View Ltd. v. NunezOpinion
CV-05-1300 (ARR) (JMA).
September 20, 2005
APPEARANCES: Julie Cohen Lonstein, Esq., Ellenville, NY, Attorney for Plaintiff.
Juan Bello, Brooklyn, NY, Defendant.
Playa Dorado Restaurant, South Ozone Park, NY, Defendant.
REPORT AND RECOMMENDATION
By order dated August 26, 2005 this matter was referred to the undersigned by the Honorable Allyne R. Ross for a report and recommendation on damages. Plaintiff has made an application for damages, attorney's fees and costs against defendant JUAN BELLO, individually and d/b/a PLAYA DORADO RESTAURANT, and PLAYA DORADO RESTAURANT. For the reasons below, I respectfully recommend that plaintiff be awarded $2,198 in statutory damages, with a $10,000 increase for defendants' willful violation of the statute, and attorney's fees and costs of $1,355 for a total damages award of $14,453.
I. BACKGROUND
Plaintiff Garden City Boxing Club, Inc. ("Garden City Boxing") was a broadcast licensee of the professional fight between Oscar De La Hoya and Bernard Hopkins on September 18, 2004 (Dkt No. 5: 08/19/05 Mot. for Default J., Pl.'s Aff., Ex. A). Plaintiff expended funds to obtain the rights to the program and contracted with thirty-six establishments in New York State to broadcast it (Id., Pl.'s Aff. ¶¶ 3, 6; Id., Ex. C). Defendants' establishment did not contract with plaintiff to legally broadcast the boxing match.The interstate transmission of the match was electronically coded ("scrambled") to protect its access from those who did not pay or properly obtain a license for its viewing. By failing to contract with plaintiff for the rights to air the boxing match in their establishment, defendants would not have had the ability to receive the signal without (i) the use of a "blackbox", which is purchased for a fee and when installed on a cable TV line will descramble reception of pay-per-view broadcasts; (ii) misrepresenting their commercial nature to the cable company in order to receive transmission at the residential price of $54.95; or (iii) the use of an illegal cable drop or splice from an apartment or home adjacent to the commercial establishment that had already purchased the broadcast at the residential price of $54.95 (Id., Pl.'s Aff. ¶ 12).
On September 18, 2004, without authorization, defendants intercepted and received the signal for the De La Hoya/Hopkins boxing event. Defendants then played the fight for patrons in their commercial establishment, Playa Dorado Restaurant, located at 118-06 Rockaway Blvd. South Ozone Park, New York 11420-2420 (Id., Piracy Aff.). An investigator for plaintiff found that, when he visited the Playa Dorado Restaurant between 11:10 and 11:15 p.m., there were fifteen patrons present for the broadcast of the fight (Id.). The investigator estimated that the Playa Dorado Restaurant's approximate capacity was forty patrons (Id.).
Plaintiff filed a complaint on March 9, 2005 (Dkt No. 1: 03/09/05 Compl.). Defendants were served on April 6, 2005 (Dkt Nos. 3 4: 04/22/05). Defendants failed to answer or otherwise move and on August 26, 2005 Judge Ross granted plaintiff's motion for default judgment (Dkt No. 6: 08/29/05 Order).
II. DISCUSSION
A. Damages.
Plaintiff seeks damages, as well as attorney's fees and costs, for defendants' violation of 47 U.S.C. §§ 553(a)(1) and 605(a). Section 553 prohibits persons from intercepting or receiving "any communications service offered over a cable system, unless specifically authorized to do so . . ." 47 U.S.C. § 553(a)(1). Section 605 proscribes the unauthorized interception and publication of any "radio communication." Id. § 605(a).
Defendants' default is deemed an admission of the use of an unauthorized device to intercept coded and scrambled cable transmissions. 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); Au Bon Pain Corp. v. Artect, Inc., 653 F.2d 61, 65 (2d Cir. 1981); see also Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 108 (2d Cir. 1997) (recognizing that the factual allegations in the complaint, except those relating to damages, are deemed true after default). Defendants have thus admitted to violating both sections 553 and 605. Where a defendant admits to violating both sections, a plaintiff may elect to recover damages under section 605. See Int'l Cablevision, Inc. v. Sykes, 75 F.3d 123, 131 n. 5 (2d Cir.), cert. denied sub nom. Noel v. Int'l Cablevision, 519 U.S. 929 (1996). Section 605 states that where plaintiff is unable to provide evidence of the extent of any violations, the plaintiff may elect to recover statutory damages, instead of actual damages. 47 U.S.C. § 605(e)(3)(C)(i)(II). As a result of defendants' default, Garden City Boxing has been unable to ascertain the extent of defendants' violations. Therefore, plaintiff appropriately has elected to recover statutory damages.Id. at § 605(e)(3)(C)(i)(II).
The range of statutory damages for a violation of section 605(a) is $1,000 to $10,000. The court has discretion to determine the number of violations and assess damages for each violation. Id. The statute does not clearly define "violation"; rather, the court decides which acts of a defendant constitute a violation. It is difficult to arrive at a precise damages figure in cases such as this, where only one specific instance of unauthorized reception is alleged.
The court has two options when assessing damages under section 605. First, it can multiply the number of patrons present at the unauthorized broadcasting by a specific dollar amount, typically the customary charge for the pay-per-view event being shown.See, e.g., Time Warner Cable of New York City v. Taco Rapido Rest., 988 F. Supp. 107, 111 (E.D.N.Y. 1997) (awarding statutory damages of $50 per patron); Cablevision Systems Corp. v. 45 Midland Enterprises, 858 F. Supp. 42, 45 (S.D.N.Y. 1994) (awarding statutory damages of $50 per patron). Alternatively, where the exact number of patrons is unknown, the court can impose damages based on what it "considers just." Kingvision Pay-Per-View, Ltd. v. Scott E's Pub, Inc., 146 F. Supp. 2d 955 (E.D. Wis. 2001) (awarding $5,250 in statutory damages); Home Box Office v. Champs of New Haven, Inc., 837 F. Supp. 480, 484 (D. Conn. 1993) (awarding $10,000.00 in statutory damages).
Other factors that the court may consider are "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. CV-87-3528, 1989 WL 8165, at *6 (E.D.N.Y. Jan. 17, 1989) (Caden, Mag. J.), (quoting Cablevision Sys. Dev. Co. v. Cohen, No. CV-84-1155, slip op. at 4-5 (E.D.N.Y. May 20, 1988)).
Garden City Boxing invests millions of dollars annually promoting boxing broadcasts. With each establishment that pirates signals, plaintiff suffers an erosion of its profits and is consequently forced to pass off costs to lawful residential and commercial customers through increased pricing (Dkt No. 5, Pl.'s Aff. ¶¶ 13-14, 17).
There is no information whatsoever about defendants, other than a drawing of the interior of the restaurant at 118-06 Rockaway Blvd. provided by plaintiff's investigator. I am therefore inclined to conclude that defendant's showing of the fight the night of September 18, 2004 was a single violation, and to utilize the per-patron method to establish damages. An affidavit from Garden City Boxing's owner states that a personal residence would have been charged $54.95 to view the fight (Pl.'s Aff. at ¶ 12B). Plaintiff's fee for sub-licensing of the broadcast to commercial establishments in New York was $20 per patron based on the commercial establishment's fire code occupancy ("FCO") (Dkt No. 5, Pl.'s Aff., Ex. B). Thus, had defendants paid for the sub-licensing fee for their establishment, which plaintiff's investigator estimated to have a forty person capacity, it would have been $800. However, if defendants were made to pay the $20 per patron price to derive the statutory damages, their actions of pirating the broadcast would carry no more ramifications than had they legally purchased the sub-licensing fee.
Consequently, I recommend that the per-patron amount be set at $54.95, the amount that each patron who was able to view the fight for free at Playa Dorado Restaurant would have paid to view the fight from home, which they might have elected to do if they did not have access to a cover-free fight at the neighborhood restaurant and bar. During his five minute visit, the investigator's head count revealed fifteen patrons present. However, he estimated that the facility could in fact hold forty patrons at maximum capacity. It is entirely possible that at some point in the evening the restaurant did indeed hold that maximum number, if not more, as it is debatable whether an establishment that deigns to display illegally pilfered boxing matches to attract additional customers would turn away those very same customers when the facility reached its maximum capacity. Therefore, I recommend that Garden City Boxing be awarded $2,198 in statutory damages for the violation.
This sum was derived by the multiplication of the $54.95 price an individual would pay to view the boxing match at home on a pay-per-view channel and the number of patrons Playa Dorado Restaurant could have reasonably accommodated at a single time. While it is true that patrons may have come and gone throughout the night, increasing that number of 40 patrons to more with their influx and outflow, plaintiff has provided no additional information other than its investigator's five minute observation and it is on that observation that the court bases its estimation.
Plaintiff seeks an increased award, contending that defendants' willfully violated the statute for commercial advantage or private financial gain. See 47 U.S.C. § 605 (e)(3)(C)(ii). Willfulness is defined as "disregard for the governing statute and an indifference for its requirements[,]" Trans World Airlines, Inc. v. Thurston, 469 U.S. 111, 126-27 (1985), and is established by the fact that an event is broadcast, without authorization, through a defendant's cable box. See Time Warner Cable of New York City v. Googies Luncheonette, Inc., 77 F. Supp. 2d 485, 490 ("Signals do not descramble spontaneously, nor do television sets connect themselves to cable distribution systems"). Section 605(e)(3)(C)(ii) allows for increased damage awards against persons or entities operating commercial establishments that show the unauthorized programming to patrons.See Googies Luncheonette, 77 F. Supp. 2d at 491 (increasing award by $12,000); Taco Rapido Restaurant, 988 F. Supp. at 111-12 (increasing award by $5,000).
Courts use a variety of factors in determining whether a defendant's willful conduct justifies increased damages. These factors are i) repeated violations over an extended period of time; ii) substantial unlawful monetary gains; iii) advertising of the broadcast; or iv) charging of a cover charge or premiums for food and drinks. See Kingvision Pay-Per-View Ltd. v. El Rey Del Bistec Y Caridad, Inc., No. 01-CV-6562, 2001 WL 1586667, at *2 (S.D.N.Y. Dec. 12, 2001). Courts also consider a plaintiff's significant actual damages. Id.
In this case, Garden City Boxing seeks the maximum increased award of $100,000, but has offered no evidence that defendants have pirated events other than the De La Hoya/Hopkins fight broadcasted on September 18, 2004, or that defendants advertised the broadcast of the event, or that the restaurant charged a premium on food and drinks. Defendants' conduct was nonetheless willful by virtue of their illegal interception of plaintiff's broadcast. Consequently, I recommend that the damage award be increased by $10,000 for a willful violation of the statute. This addition reflects plaintiff's estimated damages, defendants' likely commercial gain in selling food and drink to between fifteen and forty patrons, and the need to deter future theft of service.
B. Pre-judgment Interest and Permanent Injunction
Plaintiff has requested in its papers an award of pre-judgment interest and indicates an applicable percentage rate of 9% from the date of June 5, 2004 on damages awarded. Plaintiff citesKingvision v. Ruiz, No. 04-CV-6566, 2005 WL 589403 (S.D.N.Y. Mar. 9, 2005) in which the court granted Garden City Boxing's request for the 9% pre-judgment interest (Dkt. No. 5, Pl.'s Mem. of Law.
However, pre-judgment interest is not appropriate in this case. In Kingvision Pay-Per-View Ltd. v. Olivares, et al., No. 02-CV-6588, 2004 WL 744226 (S.D.N.Y. Apr. 5, 2004), the court considered whether the plaintiff was entitled to pre-judgment interest under N.Y.C.P.L.R. 5001 and concluded that it was not.Olivares, 2004 WL 744226, at *5. An award of interest under C.P.L.R. 5001 "is founded on the theory that there has been a deprivation of use of money or its equivalent and that the sole function of interest is to make whole the party aggrieved. It is not to provide a windfall for either party."155 Henry Owners Corp. v. Lovlyn Realty Co., 231 A.D.2d 559, 560, 647 N.Y.S.2d 30, 31 (2d Dept. 1996), citing Kaiser v. Fishman, 187 A.D.2d 623, 627, 590 N.Y.S.2d 230, 234 (2d Dept. 1992). Under C.P.L.R. 5001, there are two major exceptions for granting pre-judgment interest: personal injury and punitive damages claims. See N.Y.C.P.L.R. § 5001 (McKinney, 1992); Deborah S. v. Diorio, 160 Misc.2d 210, 612 N.Y.S.2d 542 (1st Dept. 1994). Statutory damages under the Communications Act are "analogous to punitive damages in that they are designed to deter others from similar infringing activity." See Olivares, 2004 WL 744226, at *5; see also Kaplan v. First City Mortgage, 183 Misc.2d 24, 30, 701 N.Y.S.2d 859, 865 (N.Y. City Ct. 1999) (statutory damages under Telephone Consumer Protection act of 1991 are punitive; no interest accrues before judgment). Since plaintiff provides no other binding or persuasive authority to support its request for pre-judgment interest, the Court declines to recommend its granting.
Additionally, plaintiff requests a permanent injunction enjoining defendants from violating sections 605 or 533, pointing to the fact that many business establishments that pirate one event have or will pirate additional broadcasts in the future. Plaintiff reasserts the fact that such actions cost it millions of dollars annually and supports its request with Cablevision v. Muneyyirci, 876 F. Supp. 415 (E.D.N.Y. 1994) (Dearie, J.). InCablevision, the Court did award a permanent injunction against defendants; however, the facts were significantly different. Defendants were engaged in the illegal sale of cable equipment that allowed for the access of scrambled pay-per-view cable programs, and plaintiff presented evidence of at least 390 incidences. Id. at 417. While it is indeed likely that Playa Dorado Restaurant has either broadcast pirated boxing matches in the past or may do so in the future, plaintiff has presented evidence of only one incident, and thus the Court is not persuaded that a permanent injunction is appropriate.
C. Attorneys' Fees and Costs
1. Attorney's Fees
Pursuant to section 605(e)(3)(B)(iii), plaintiff is entitled to reasonable attorney's fees and costs. 47 U.S.C. § 605(e)(3)(B)(iii). Under the "lodestar" method, attorney fees are determined by taking "the number of hours reasonably expended on the litigation [multiplied] by a reasonable hourly rate."Hensley v. Eckerhart, 461 U.S. 424, 434 (1983); see also Chambless v. Masters, Mates Pilots Pension Plan, 885 F.2d 1053, 1058-59 (2d Cir. 1989), cert. denied, 496 U.S. 905 (1990). Reasonable hourly rates are determined by reference to "the prevailing marketplace rates in the community for similar services by lawyers of reasonably comparable skill, experience and reputation." Cruz v. Local Union No. 3, 34 F.3d 1148, 1159 (2d Cir. 1994). To receive such fees plaintiff must present time records to substantiate its fee request. See New York Ass'n for Retarded Children v. Carey, 711 F.2d 1136, 1147-48 (2d Cir. 1983). Such time records must be contemporaneous and indicate "for each attorney, the date, the hours expended, and the nature of the work done." Id. at 1148.
In the present case, attorney Julie Cohen Lonstein has submitted an affidavit setting forth the total attorney's fees, with an attached exhibit itemizing the work done, hours expended, and the amount due. Ms. Cohen Lonstein performed a total of 4.5 hours in this litigation at a rate of $200 per hour, the time in which she researched and developed the case, drafted the summons and complaint, and prepared the default motions and inquest papers, among other tasks (Dkt No. 5: 08/19/05 Att'y Aff.). In another case brought by Ms. Cohen Lonstein before this Court, Garden City Boxing Club, Inc. v. Jose Santacruz, et al., No. CV-05-0063 (E.D.N.Y.) (RJD) (JMA), during the exact same time frame, for the same client, and on a virtually boiler-plate matter, Ms. Cohen Lonstein charged an hourly rate of $150 for 6.66 hours of work. Applying that rate, plaintiff is entitled to an award of $675 in attorney's fees for 4.5 hours of work and an additional $150 for 2 hours of paralegal work. This court finds that the amount of time spent was reasonable in this case and recommends an $825 award for attorney's fees.
2. Costs
Garden City Boxing seeks reimbursement for costs in the amount of $880.00, which includes $250.00 for the court filing fee, $180.00 for the cost of service of process, and $450.00 for investigative costs. "In federal court, the taxable costs for which a party may seek reimbursement include the cost of deposition and trial transcripts, witness fees and mileage, interpreting costs, and the cost of certain small photographs."Time Warner Cable of New York City v. Sanchez, No. 02-CV-5855, 2003 WL 21744089, at * 5 (S.D.N.Y. July 8, 2003); see 28 U.S.C. § 1920; Fed.R.Civ.P. 54. "There is no provision, however, for a prevailing party to be awarded the cost of its investigator." Sanchez, 2003 WL 21744089, at *5 (denying investigator costs because there is no statute or federal rule awarding such costs and because plaintiff failed to submit in its affidavit the total number of hours spent on the investigation and the hourly investigative rate). However, because in this case Garden City Boxing did provide an affidavit and invoice detailing the amount of time spent on the investigation and the rate, this court, in its discretion, will allow for a $100 reimbursement of the investigator's fees.
Plaintiff claims that it paid Signal Auditing, Inc., a private auditor, a fee of $450 per defendant. Three months earlier the plaintiff paid the same private auditor company a fee of $350 for similar services in Garden City Boxing Club, Inc. v. Jose Santacruz, et al., No. CV-050-063 (E.D.N.Y.) (RJD) (JMA). Not only is the court skeptical that the auditor legitimately earned $450 for a ten minute investigation, even if it were true, plaintiff should seek a more reasonable service provider, as the court is unwilling to allow more than a $100 fee for the brief investigation. It should be noted that the court awards this generous amount reluctantly.
Based on the foregoing, I recommend that Garden City Boxing be awarded $530 in costs, representing filing fees, costs for service of process, and a portion of plaintiff's investigatory expenses.
This sum includes $250 filing fee, $180 service of process fee, and $100 towards the investigator's fees.
III. CONCLUSION
For the above reasons, I respectfully recommend that plaintiff be awarded $2,198 in statutory damages, with a $10,000 increase for defendants' willful violation of the statute, and attorney's fees and costs of $1,355 for a total damages award of $14,453.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. § 636(b)(1) (2000); Fed.R.Civ.P. 72, 6(a), 6(e).
SO ORDERED.