Opinion
No. 04 Civ. 7288 (LTS)(DFE).
June 22, 2005
MEMORANDUM ORDER
This matter comes before the Court on the unopposed motion of Plaintiff Garden City Boxing Club, Inc. ("Plaintiff" or "Garden City"), for an order granting it a default judgment against La Cabana Restaurant ("La Cabana"), a commercial establishment with its principal place of business in New York, Candido F. Rodriguez ("Rodriguez"), and Mercedes Perez ("Perez") (collectively, "Defendants"). In its Complaint, Plaintiff alleges that La Cabana is a corporate entity owned by Rodriguez and Perez, and that Rodriguez and Perez, as individuals, hold the liquor license for La Cabana. (Complaint ¶¶ 5, 6.) Plaintiff brings this action pursuant to 47 U.S.C. §§ 553 and 605, alleging that Defendants violated federal communications laws when they illegally intercepted and received or assisted in interception and receipt of a transmission of a boxing match between Oscar de la Hoya and Fernando Vargas (the "Event") without entering into a contractual agreement with Plaintiff, which had exclusive rights to transmission and broadcast of the Event in the State of New York, and displayed the Event for patrons of the restaurant.
As Defendants never appeared in this action, Plaintiff moves for an entry of a default judgment against Defendants. Plaintiff seeks statutory damages, reasonable attorneys' fees and costs for Defendants' willful unauthorized interception and transmission of the Event with the purpose of commercial advantage and private financial gain.
The Court has considered thoroughly the Complaint and all of the submissions related to this motion and the decision to be rendered reflects such consideration. For the following reasons, Plaintiff's motion is granted and damages are awarded to the extent set forth below. Plaintiff is granted leave to make a supplemental submission with respect to attorneys' fees and costs.
BACKGROUND
Garden City Boxing Club, Inc., a marketing and licensing company, obtained exclusive rights to show and "sublicense its right to exhibit the closed-circuit telecast" of the September 14, 2002, Championship boxing match between Oscar de la Hoya and Fernando Vargas at various commercial establishments in New York, including bars and restaurants. (Affidavit of Marcus W. Corwin, dated April 28, 2005 ("Corwin Aff."), ¶¶ 3-5.) The transmission of the fight was not available to the general public in New York and was limited to customers at authorized closed-circuit establishments that had paid sublicense fees and entered into a contractual agreement with Plaintiff. (Id. ¶¶ 6-8.) To prevent the unauthorized broadcasting of the Event, the program was encoded or "scrambled" and, therefore, only licensed establishments that received specific authorization from Plaintiff were permitted to televise unscrambled transmission of the fight. (Id. at ¶ 7.) Defendants had neither entered into a sublicense agreement with Plaintiff nor obtained permission to telecast the Event. (Corwin Aff. ¶ 9.)
On September 14, 2002, Plaintiff's auditor, Mr. Fischler, witnessed the unauthorized display of the fight at La Cabana Restaurant. (Affidavit of Sean Fischler, dated September 14, 2002 ("Fischler Aff."), ¶ 3.) Mr. Fischler further observed twenty of Defendants' patrons purchase food and beverages while viewing the Event. (Id.) Because Defendants had not contracted with Plaintiff to display the fight and the transmission of the program was scrambled, Defendants must have engaged in specific wrongful action of "using an unauthorized decoder, obtaining cable or satellite service and illegally altering the cable or satellite service to bring the signal of the Event into the establishment." (Corwin Aff. ¶ 10.) As a result of Defendants' "pirating of the Event," Plaintiff claims to have suffered damages in the form of lost licensing fees for the Event as well as possible losses of future business from legitimate commercial entities that will refuse to pay sublicensing fees because they cannot compete with unauthorized providers. (Id. ¶ 12.)
PROCEDURAL HISTORY
Garden City filed the Complaint in this action on September 13, 2004. The record indicates that on October 6, 2004, Plaintiff filed affidavits of service attesting to personal service of Summons and Complaint upon "Jane" Smith, managing agent of Defendant La Cabana Restaurant, and co-worker of Defendants Rodriguez and Perez, on September 25, 2004, and to the mailing of copies to Rodriguez and Perez at the business address. Defendants did not file an answer to the Complaint or otherwise move in this proceeding, and Plaintiff subsequently sought permission to file a motion for a default judgment.
On January 12, 2005, the Court granted Plaintiff permission to make a motion for a default judgment and ordered Plaintiff to submit evidentiary materials that it would have proffered to meet the burden of proof in its affirmative case had the matter gone to trial. The Court further ordered that Plaintiff serve and file supplemental papers to accompany its motion. Plaintiff filed and served the instant motion for default judgment on or about May 3, 2005. Plaintiff served supplemental papers as directed by the Court on or about May 26, 2005, and filed those papers on June 6, 2005. The record also reflects that Plaintiff obtained a Certificate of Default from the Clerk of the Court, issued on March 1, 2005, confirming Defendants' default. Defendants have not submitted any response to Plaintiff's default judgment motion.
DISCUSSION
In deciding a motion for a default judgment, the Court considers the following three factors: first, whether the defendants' default was willful; second, whether defendants have a meritorious defense to plaintiff's claims; and third, the level of prejudice the non-defaulting party would suffer as a result of the denial of the motion for a 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 a default judgment are left to the sound discretion of the district court. See Shah v. New York State Dep't of Civil Service, 169 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), quoted in Citadel Management, Inc. v. Telesis Trust, Inc., 123 F. Supp. 2d 133, 145 (S.D.N.Y. 2000). An entry of a 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). "[T]he court may find a default to have been willful where the conduct of counsel or the litigant was egregious and was not satisfactorily explained."Id. at 738. In light of Defendants' failure to respond in any way to the Summons and Complaint, or otherwise make an appearance in this action and explain their failure to defend, the Court finds that Defendants defaulted willfully. As Defendants have failed to proffer any defenses and are, therefore, deemed to have admitted the well-pleaded allegations of the Complaint, other than those as to the amount of damages (Fed.R.Civ.P. 8(d)), the second factor of whether Defendants have a meritorious defense does not apply under the present circumstances.
In addition to documenting the proper service of its detailed Complaint, Plaintiff has, in response to the Court's January 12, 2005 Order, served on Defendants and submitted to the Court affidavits setting forth the evidence it would have presented in its affirmative case had the matter gone to trial. This evidence includes an eyewitness account of observation of unauthorized transmission of the Event at La Cabana Restaurant, and an affidavit attesting to the deliberate measures that Defendants must have taken to televise the fight. Since Defendants have failed to respond, there is no indication that requiring Plaintiff to take further steps prior to a determination on the merits would be effective in eliciting a response from Defendants. Therefore, denial of this motion would be unfairly prejudicial to Plaintiff.
Plaintiff's Claim for Damages
Plaintiff alleges that Defendants violated § 705 of the Federal Communications Act of 1934, as amended, 47 U.S.C. §§ 553 and 605 (hereinafter, the "Statute"), and seeks an entry of a judgment, jointly and severally, against Defendants La Cabana Restaurant, Rodriguez, and Perez for $50,000 plus reasonable attorneys' fees and costs. Although Plaintiff's rights are protected under both Section 553, covering cable system transmissions, and Section 605, concerning radio communications, Plaintiff may only recover damages under one of those provisions. Time Warner Cable of New York City v. Barbosa, 2001 WL 118608, at *5 (S.D.N.Y. Jan. 2, 2001). See also Int'l Cablevision, Inc. v. Sykes, 75 F.3d 123, 129 (2d Cir. 1996); Time Warner Cable of New York City v. Barnes, 13 F. Supp. 2d 543, 548 (S.D.N.Y. 1998). In light of this limitation, courts generally award damages pursuant to Section 605, which provides for more generous relief. See e.g., Sykes, 75 F.3d at 127. See also Time Warner Cable of New York City v. Fland, 1999 WL 1489144, at *3 (S.D.N.Y. 1999).
Section 553(a)(1) provides that "[n]o 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. . . ." 47 U.S.C. § 553(a)(1). The party aggrieved by the violation of Subsection (a)(1) may pursue a civil cause of action to recover statutory damages of no less than $250 and no more than $10,000 "as the court considers just." 47 U.S.C. § 553(c)(3)(A)(ii) (West 2001). The relevant provisions of section 605 are summarizedinfra.
Plaintiff seeks to recover the maximum amount of statutory damages of $10,000 under each of Sections 553 and 605. Further, Plaintiff requests an additional $30,000 (three times the statutory amount) to compensate for Defendants' willful interception and transmission of the Event.
Under Section 605(a), "[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 communication to any person." 47 U.S.C. § 605(a). The aggrieved party may bring a civil action to recover either actual damages or statutory damages for each violation in the amount 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). Plaintiff argues that statutory damages are more appropriate because its estimated $600 loss of sublicense fees for transmitting the Event would not adequately compensate Plaintiff for potential lost profits resulting from Defendants' unlawful actions or serve a punitive effect.
In calculating the amount of basic statutory damages pursuant to Section 605, courts consider the revenue lost by the aggrieved party and saved by the violator, the award's deterrent value, and the willfulness of the defendant's actions. Cablevision Sys. New York City Corp. v. Flores, 2001 WL 761085, at *3-4 (S.D.N.Y. 2001); Barbosa, 2001 WL 118608 at *6. Moreover, where the violation was committed "willfully and for purposes of direct or indirect commercial advantage or private financial gain," the Court may award additional damages not exceeding $100,000. 47 U.S.C. § 605(e)(3)(C)(ii).
Based on the affidavits of Plaintiff's investigators and Plaintiff's allegations set forth in the Complaint, which are deemed admitted in the absence of a responsive pleading, the Court finds that Defendants engaged in willful and unauthorized interception of the broadcast of the Event. As La Cabana is a commercial establishment, it could not legitimately have aired the Event without first obtaining the proper authorization and the decoding mechanism from Plaintiff. (Corwin Aff. ¶ 7.) Defendants never contracted with Plaintiff "to obtain the rights to broadcast the Event." (Compl. ¶ 12.) Thus, Defendants must have "undertaken specific wrongful action to intercept, receive and/or exhibit the telecast of the Event." (Corwin Aff. ¶ 10.) Further, Defendants' interception and display of the fight were committed for purposes of private financial gain, as Defendants allowed twenty patrons to view the Event while charging them for food and beverages. (Id. ¶ 11; Fischler Aff. ¶ 3.) As noted above, the individual defendants are alleged to be the holders of La Cabana's liquor license as well as owners of the restaurant business, admitted factual allegations that support the inference that their actions in facilitating the display of the program to restaurant patrons was undertaken for commercial gain. Therefore, the Court has discretion to enhance the damages pursuant to Section 605. Cablevision v. Faschitti, 1996 WL 48689 at *2 (S.D.N.Y. 1996).
In light of the nature of the violations presented in this matter, "a higher award is necessary to deter future violations of the communications law." Id. at 1996 WL 48689 at *3. The Court finds that Plaintiff is entitled to the full $10,000 baseline statutory damages and an additional $30,000 in enhanced damages against Defendants La Cabana Restaurant, Rodriguez and Perez. Plaintiff also seeks an award of its full costs, including attorneys' fees, pursuant to section 605(e)(3)(B)(iii) of the statute, but has not proffered any affidavit detailing the fees and expenses incurred. Plaintiff will be given an opportunity to supplement its application with appropriate evidentiary material.
Section 605(e)(3)(B)(iii) requires the Court to "direct the recovery of full costs, including reasonable attorneys' fees to an aggrieved party who prevails." 47 U.S.C. § 605(e)(3)(B)(iii).
CONCLUSION
For the foregoing reasons, Plaintiff's motion for a default judgment is granted. Judgment will be entered against Defendants La Cabana Restaurant, Rodriguez and Perez, jointly and severally, for damages in the amount of $40,000. Plaintiff is directed to serve and file any supplemental papers in support of its application for costs (including attorneys' fees) and to settle a proposed judgment on Defendants, no later than July 8, 2005.
SO ORDERED.