Opinion
17cv05355 (JGK) (DF)
09-20-2018
J&J SPORTS PRODUCTIONS, INC., Plaintiff, v. FANTASY BAR AND RESTAURANT CORP. d/b/a FANTASY BAR & RESTAURANT and MARTINA FERMIN DOMINGUEZ, Defendants.
REPORT AND RECOMMENDATION
TO THE HONORABLE JOHN G. KOELTL, U.S.D.J.:
On July 14, 2017, plaintiff J&J Sports Productions, Inc. ("Plaintiff") filed a Complaint with this Court, alleging violations of the Communications Act of 1934, 47 U.S.C. §§ 553 and 605 (the "Communications Act" or the "Act"), by Fantasy Bar & Restaurant Corp., d/b/a Fantasy Bar & Restaurant ("Fantasy Bar Corp.") and Marina Fermin Dominguez ("Dominguez") (collectively "Defendants"). (Dkt. 1.) Fantasy Bar Corp. and Dominguez have failed to move, answer, or otherwise respond to the Complaint.
On November 1, 2017, the Honorable John G. Koeltl, U.S.D.J., found that Plaintiff was entitled to a default judgment against Defendants (Dkt. 19), and referred the matter to this Court to conduct an inquest and to report and recommend concerning Plaintiff's damages (Dkt. 20). For the reasons that follow, I recommend that Plaintiff be awarded damages plus costs, as calculated below, on the default judgment against Defendants.
BACKGROUND
As alleged in Plaintiff's Complaint and supported by the documentation submitted by Plaintiff in support of its Proposed Findings of Fact and Conclusions of Law, the relevant facts are as follows:
Plaintiff is a California corporation with its principal place of business in Santa Clara, California. (See Complaint, dated July 14, 2017 ("Compl.") (Dkt. 1) ¶ 4; Proposed Findings of Fact and Conclusions of Law, dated Dec. 22, 2017 ("Proposed Findings") (Dkt. 22) ¶ 1.) Defendant Fantasy Bar Corp. is a corporation with its principal place of business located at 23 E. Tremont Ave., Store 4, Bronx, New York 10453 (see Compl. ¶ 5; Proposed Findings ¶ 2); that place of business consists of a bar and restaurant ("Fantasy Bar") (see Proposed Findings, Ex. B (Affidavit of Daryl M. Armour, sworn to May 13, 2015 ("Armour Aff.")), at 1-2). According to Plaintiff, upon information and belief, defendant Dominguez is the officer, director, shareholder, and/or principal of Fantasy Bar Corp, and "the individual [who had] supervisory capacity and control over the activities occurring within [Fantasy Bar] on May 2, 2015." (Compl. ¶ 5; see also id. ¶¶ 16-17, 33, 49; Proposed Findings ¶ 3 and Ex. A (Dec. 22, 2017 printout from New York State Liquor Authority website, listing June 11, 2012 filing date for on-premises liquor license and Aug. 1, 2016 effective date of license, and identifying Dominguez as Fantasy Bar's "Principal[]").)
On May 2, 2015, boxers Floyd Mayweather and Manny Pacquiao were scheduled to appear in a boxing match. (See Compl. ¶ 7; Proposed Findings ¶ 5 and Ex. C (Affidavit of Joseph Gagliardi, sworn to Oct. 18, 2017 ("Gagliardi Aff.")) ¶ 3.) Plaintiff obtained the exclusive right to distribute the Mayweather/Pacquiao fight, together with selected "undercard" bouts, in a live broadcast, to establishments in New York that wished to exhibit the fight publicly to their patrons. (See Compl. ¶ 7 and Ex. 1 (Closed Circuit Television License Agreement); Proposed Findings ¶ 5; Gagliardi Aff. ¶ 3.) Plaintiff then hired independent investigators to identify establishments that exhibited the fight without having first secured from Plaintiff the right to do so. (See Gagliardi Aff. ¶¶ 6-7.)
One such investigator, Daryl M. Armour ("Armour"), visited Fantasy Bar on the night of the fight. (See Proposed Findings ¶ 7; Armour Aff., at 1-2.) Armour entered Fantasy Bar at 12:43 A.M., joining approximately 76 people in the premises. (See Armour Aff., at 1-2.) Upon entering the establishment, Armour saw two television sets: one 55-inch set over the bar, and one 32-inch set on the wall by the entrance. (See id.) According to Armour, Plaintiff's proprietary broadcast of the Mayweather/Pacquiao fight was being shown on the 55-inch set over the bar. (See id.) Plaintiff asserts, however, it had never received payment from Defendants to secure broadcast rights to the fight, nor had it given Defendants authorization to exhibit the fight. (See Compl. ¶¶ 13, 16-17, 19; Proposed Findings ¶¶ 8, 11; Gagliardi Aff. ¶ 7.)
Specifically, Armour states that he observed the ninth round of the boxing match between Mayweather and Pacquiao, with one minute and 34 seconds left in the round. (See id.) Armour further describes that he saw "Pacquiao was swing [sic] with his right and left hooks and then the fighters started to hold each other." (Id.)
Having discovered Defendants' unauthorized use of the fight broadcast, Plaintiff filed this action on July 14, 2017, alleging that, by exhibiting the broadcast without permission, Defendants violated the Communications Act. (See Compl. ¶¶ 23, 35, 48; Proposed Findings ¶ 15.) Defendants failed to respond to the Complaint, and, as noted above, Judge Koeltl found that Plaintiff was entitled to a default judgment and referred the matter to this Court for a damages inquest. (See Dkt 20.) To date, neither Fantasy Bar Corp. nor Dominguez has responded to Plaintiff's submissions with respect to its claimed damages, nor has either defendant requested a hearing with respect to damages. I therefore issue this report and recommendation based solely on Plaintiff's submissions.
DISCUSSION
As set out in its Proposed Findings, Plaintiff has requested that the Court award it damages in the amount of $30,528.60, plus litigation costs in the amount of $470. (See Proposed Findings ¶¶ 53-54; Gagliardi Aff. ¶ 18.) Without a response from Defendants, this Court must assess whether Plaintiff has sufficiently demonstrated that it is entitled to the amounts in question.
Although a boilerplate "wherefore" clause in a supporting affidavit submitted by Plaintiff references a request for attorneys' fees (see Gagliardi Aff., at 6), Plaintiff has not actually sought an award of attorneys' fees in this case. To the contrary, Plaintiff, which has provided no information whatsoever regarding the fees incurred in connection with this action, has explicitly advised the Court that it "is not requesting attorneys fees herein." (Proposed Findings ¶ 51.) Accordingly, this Court will limit this Report and Recommendation to a consideration of Plaintiff's request for damages and costs.
I. APPLICABLE LEGAL STANDARDS FOR A DAMAGES INQUEST
A "default judgment entered on well-pleaded allegations in a complaint establishes a defendant's liability," Bambu Sales, Inc. v. Ozak Trading, Inc., 58 F.3d 849, 854 (2d Cir. 1995) (internal quotation marks and citation omitted), but it does not reach the issue of damages, see Ferri v. Berkowitz, 561 Fed. App'x 64, 65 (2d Cir. 2014) (Summary Order) (citing Transatl. Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 111 (2d Cir. 1997)). A plaintiff must therefore substantiate its claim with sufficient evidence to prove its damages with reasonable certainty. RGI Brands LLC v. Cognac Brisset-Aurige, S.A.R.L., No. 12cv01369 (LGS) (AJP), 2013 WL 1668206, at *6 (S.D.N.Y. Apr. 18, 2013), report & recommendation adopted, 2013 WL 4505255 (Aug. 23, 2013). Although a plaintiff is entitled to all reasonable inferences in its favor based upon the evidence submitted, see U.S. ex rel. Nat. Dev. & Const. Corp. v. U.S. Envtl. Universal Servs., Inc., No. 11cv730 (CS), 2014 WL 4652712, at *3 (S.D.N.Y. Sept. 2, 2014) (adopting report and recommendation), if a plaintiff fails to prove damages to a reasonable certainty, then the court should decline to award damages, even where liability has been established, see Lenard v. Design Studio, No. 08cv10560 (JPO), 889 F. Supp. 2d 518, 538 (S.D.N.Y. Aug. 24, 2012) (adopting report and recommendation).
In determining whether a plaintiff has demonstrated an adequate basis for the damages it seeks, the court may either conduct "a review of detailed affidavits and documentary evidence" or may consider "evidence presented at a hearing." Cement & Concrete Workers Dist. Council Welfare Fund v. Metro Found. Contractors Inc., 699 F.3d 230, 234 (2d Cir. 2012); see also RGI Brands, 2013 WL 1668206, at *6. A hearing is not required where the plaintiff provides the court with evidence sufficient to permit a damages calculation. See Fed. R. Civ. P 55(b)(2) (a court may conduct hearings on damages "as it deems necessary and proper"); see also Metro Found. Contractors Inc., 699 F.3d at 234 (citing Action S.A. v. Marc Rich & Co., Inc., 951 F.2d 504, 508 (2d Cir. 1991)).
II. APPROPRIATE AWARD IN THIS CASE
A. Plaintiff's Election of Remedies
The unauthorized interception and reception of any radio or cable communication services, "which originate as satellite-delivered radio communications," is an express violation of the Communications Act, specifically 47 U.S.C. §§ 553(a)(1) and 605(a). Garden City Boxing Club, Inc. v. Conway, No. 06cv3145 (BSJ) (HBP), 2009 WL 125434, at *3 (S.D.N.Y. Jan. 20, 2009) (citing Cmty. Television Sys., Inc. v. Caruso, 284 F.3d 430, 434-35 (2d Cir. 2002); Int'l Cablevision, Inc. v. Sykes & Noel, 75 F.3d 123, 133 (2d Cir.1996) (internal quotations omitted)). In situations where liability has been established under both Sections 553 and 605 of the Act, a plaintiff may recover damages under only one of those sections. See, e.g., Garden City Boxing Club, Inc. v. Paquita's Café, Inc., No. 06cv06953 (RMB) (JCF), 2007 WL 2783190, at *3 (S.D.N.Y. Sept. 26, 2007) (citations omitted); see also Sykes, 75 F.3d at 129.
47 U.S.C. § 553(a)(1) provides, in pertinent part: "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. § 605(a) provides, in pertinent part: "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." As the Second Circuit noted in Int'l Cablevision, Inc. v. Sykes, 75 F.3d 123 (2d Cir. 1996), Section 605 "not only prohibits unauthorized interception of traditional radio communications, but also communications transmitted by means of new technologies," including satellite communications, id., at 133.
Here, Plaintiff has specified that it seeks relief under Section 605. (See Proposed Findings ¶ 28.) Where liability is found under Section 605(a) of the Act, a plaintiff may elect to recover either actual damages under Section 605(e)(3)(C)(i)(I), or statutory damages under Section 605(e)(3)(C)(i)(II). Although Plaintiff discusses, in the alternative, both types of damages in its Proposed Findings (see Proposed Findings ¶¶ 28-37), it has apparently elected to seek the latter (see Gagliardi Aff. ¶ 2 ("I make this affidavit in support of Plaintiff's request to recover statutory damages"); Proposed Findings ¶ 28 ("As its first basis for relief, [Plaintiff] is requesting statutory damages pursuant to § 605(e)(3)(C)(i)(II).")). In this regard, Plaintiff explains that statutory damages "are appropriate where actual damages are difficult to prove" (Proposed Findings ¶ 31), and states that, "[i]n the instant case, it would be extremely difficult to determine the full extent of the profits lost by [Plaintiff] and the additional damages sustained" (id. ¶ 31).
As Plaintiff had a proprietary interest in the intercepted communications, it qualifies as a "person aggrieved" within the meaning of 47 U.S.C. § 605(d)(6), and is entitled to recover statutory damages of $1000 to $10,000 for each violation of Section 605(a), as per Section 605(e)(3)(C)(i)(II). The Court may also increase the award by up to $100,000, if it finds that the violation of Section 605(a) "was committed willfully and for purposes of direct or indirect commercial advantage or private financial gain." 47 U.S.C. § 605(e)(3)(C)(ii). The Court is to award these statutory damages "as [it] considers just." 47 U.S.C. § 605(e)(3)(C)(i)(II).
Section 605(d)(6) provides, in pertinent part, that "the term 'any person aggrieved' shall include any person with proprietary rights in the intercepted communication by wire or radio, including wholesale or retail distributors of satellite cable programming."
In this case, claiming a willful violation for financial gain, Plaintiff has requested enhanced damages against Defendants. (See Proposed Findings ¶¶ 47, 54.) As noted above, Plaintiff has also requested that it be awarded certain litigation costs. (See id. ¶¶ 50, 53.)
B. Damages and Costs Recoverable From Defendant Fantasy Bar Corp.
As Plaintiff has adequately pleaded that defendant Fantasy Bar Corp. transacted business through Fantasy Bar (see Compl. ¶ 5), and that Fantasy Bar exhibited the Mayweather/Pacquiao fight without Plaintiff's authorization, Plaintiff is entitled to recover statutory damages from Fantasy Bar Corp.
1. Appropriate Base Level of Statutory Damages
In cases like this one, district courts in this Circuit have generally taken one of two different approaches to determining a base amount of statutory damages to award pursuant to 47 U.S.C. § 605(e)(3)(C)(i)(II).
The first approach has been to award a flat sum, based on a plaintiff's submitted evidence as to the amount of the license fee that the particular establishment, given its size, would have had to pay to secure the rights to the broadcast in question. See, e.g., J&J Sports Prods., Inc. v. Sugar Café, Inc., No. 17cv05350 (RA), 2018 WL 324266, at *1 (S.D.N.Y. Jan. 5, 2018) (awarding flat sum of $2,000 for base statutory damages, the amount Plaintiff would have charged the defendant for a sub-license); Kingvision Pay-Per-View, Ltd. v. Zalazar, 653 F. Supp. 2d 335, 341 (S.D.N.Y. 2009) (adopting report and recommendation recommending the sub-licensing fee as base statutory damages); Garden City Boxing Club, Inc. v. DeBlasio, No. 02cv06669 (GEL) (JCF), 2003 WL 22144395, at *4 (S.D.N.Y. Sept. 8, 2003) (awarding flat sum of $5,000), report & recommendation adopted by Order, dated Oct. 15, 2003 (Dkt. 27 in 02cv06669).
The second approach has been to multiply (a) the number of patrons present in the establishment when the unauthorized display occurred by (b) a figure representing the estimated price that each patron would have had to pay to view an authorized broadcast of the event at home. Where courts have followed this "per patron" approach, and applied a multiplier based on an estimated pay-per-view price, that multiplier has typically been in the $50-per-patron range, with a number of decisions from the Eastern District of New York adopting $54.95-per-patron as a seemingly market-based standard. (See Proposed Findings ¶ 34 (collecting Eastern District cases employing multiplier of $54.95 per person); see also, e.g., Garden City Boxing Club v. Hernandez, No. 04cv02081 (LAP), 2008 WL 4974583, at *4 (S.D.N.Y. Nov. 24, 2008) (adopting report and recommendation recommending multiplier of $50 per patron); J&J Sports Prods. v. Kamal, No. 06cv13022 (BSJ) (FM), 2008 WL 4921353, at *3 (S.D.N.Y. Nov. 18, 2008) (recommending a multiplier of $54.95), report & recommendation adopted by Order, dated Nov. 18, 2008 (Dkt. 19 in 06cv13022); Joe Hand Promotions, Inc. v. Marius, No. 05cv08472 (DAB) (THK), 2007 WL 2351065, at *3-4 (S.D.N.Y. July 3, 2007) (multiplier of $50), report & recommendation adopted by Order, dated Aug. 16, 2007 (Dkt. 15 in 05cv08472); J&J Sports Prods. v. Foxe, No. 06cv01702 (LAP) (FM), 2007 WL 1686688, at *3 (S.D.N.Y. May 29, 2007) (multiplier of $54.95), report & recommendation adopted by Order, dated Mar. 25, 2008 (Dkt. 20 in 06cv01702); Kingvision Pay-Per-View, Ltd. v. Estevez, No. 06cv03614 (KMW), 2007 WL 1462233, at *3 (S.D.N.Y. May 4, 2007) (adopting report and recommendation recommending multiplier of $50).)
As a variation on this per-patron approach to calculating statutory damages, a few courts in this district have applied, as a multiplier, a figure that does not represent the estimated pay-per-view price for the event, but rather the estimated profit made by the establishment from each patron's presence there on the date in question. See, e.g., J&J Sports Prods., Inc. v. Garcia, No. 06cv04297 (GBD) (HBP), 2011 WL 1097538, at *5 (S.D.N.Y. Mar. 11, 2011) (assuming that "each patron purchased an average of $250 worth of food and drink as a result of his or her being in the [e]stablishment while the [e]vent was being intercepted," and using that figure as a multiplier), report and recommendation adopted, 2011 WL 1046054 (S.D.N.Y. Mar. 22, 2011); Garden City Boxing, Inc. v. Salcedo, No. 04cv5027 (DFE), 2005 WL 2898233, at *2 (S.D.N.Y. Nov. 3, 2005) (using a multiplier of $300 per patron). In this Court's view, any disgorgement of a defendant's ill-gotten profits is better addressed in connection with a potential award of enhanced damages, pursuant to 47 U.S.C. § 605(e)(3)(C)(ii). (See Discussion infra, at Section II(B)(2); see also Sugar Café, Inc., 2018 WL 324266, at *2 (noting that one of the purposes of an award of enhanced damages is to "ensure[] that a willful defendant's profits are disgorged" (internal quotation marks and citations omitted)).)
Where considering these two alternate approaches for measuring statutory damages, courts have noted that only one of the measures - not both - should be used. See Sugar Café, Inc., 2018 WL 324266, at *1 (holding that statutory damages should reflect "the greater of two numbers: the flat fee that Plaintiff would have charged Defendants to air the programming at their establishment or the sum of what each individual who viewed the event at Defendants' establishment would have paid to view it at home" (citing J&J Sports Prods., Inc. v. 1400 Forest Ave. Rest. Corp., No. 13 Civ. 4299 (FB) (VMS), 2014 WL 4467774, at *7-8 (E.D.N.Y. Sept. 9, 2014))); see also 1400 Forest Ave., 2014 WL 4467774, at *8 (noting that awarding statutory damages on a per-patron or flat fee basis better reflects the actual loss that the plaintiff might have suffered, because "interested viewers would have watched the Event at home or [in the commercial establishment] . . . not in both places"); J&J Sports Prods., Inc. v. Shots Pool Hall, Inc., 16 Civ. 5067 (RRM) (SMG), 2018 WL 1115915, *3-4 (E.D.N.Y. Feb. 6, 2018) (explaining that courts award statutory damages based on lost revenue from a licensing fee or on a per-patron charge), report & recommendation adopted, 2018 WL 1116551 (E.D.N.Y. Feb. 27, 2018); Zalazar, 653 F. Supp. 2d at 340 (S.D.N.Y. 2009) (same).
In this case, Plaintiff has submitted evidence showing that it sub-licensed the broadcasting rights for the Mayweather/Pacquiao fight to commercial establishments of Fantasy Bar's size (i.e., to venues with a capacity of 101 to 200 patrons) for a flat fee of $6,000. (See Gagliardi Aff., Ex. 1 (Plaintiff's Closed Circuit Rate Card); see also Armour Aff., at 2 (stating that the capacity of Fantasy Bar is approximately 150 people).) Based on this, Plaintiff states that it would have charged Fantasy Bar Corp. $6,000 for the right to exhibit the fight at its premises. (See Proposed Findings ¶ 35; Gagliardi Aff. ¶ 8.) In addition, Plaintiff has submitted evidence that there were approximately 76 patrons in Fantasy Bar at the time of the broadcast (see Armour Aff., at 2), and asserts that, based on applying a per-patron multiple of $54.95 (in accord with the Eastern District decisions it references in its Proposed Findings), its damages could also be assessed as $4,176.20 (i.e., 76 x $54.95). (See Proposed Findings ¶ 36.) The greater of these estimated damages is $6,000, and this Court recommends that this amount be accepted here, as an appropriate base level of statutory damages to be awarded in Plaintiff's favor, as against Fantasy Bar Corp. See Sugar Café, Inc., 2018 WL 324266, at *1 (finding proffered flat-fee amount appropriate to use as base statutory award, instead of per-patron amount based on $54.95-per-patron, as flat fee was greater).
Even though, as noted above, Plaintiff asserts that it is electing to seek statutory damages in this case because of its difficulty in proving actual damages (see Proposed Findings ¶¶ 28, 31), it nonetheless contends that the Court should award it damages, prior to any enhancement, of $10,176.20, which is the total of the two measures discussed above, and which it contends would fairly represent its actual damages (see id. ¶¶ 37, 47). This Court recommends that the Court not adopt that figure for three reasons. First, this Court agrees that actual damages are difficult to establish here, and, indeed, Plaintiff has provided no evidentiary support for the proposition that it suffered actual damages based, even in part, on a per-patron multiplier of $54.95 - a figure which derives only from case law from a different district, regarding the price for other pay-per-view events that were broadcast years ago. Second, as noted in 1400 Forest Ave., a plaintiff's actual damages are not appropriately measured, in any event, by adding the amount of a lost broadcast license fee to the amount of lost revenue from home viewers, as viewers would not have watched the event in both places. See 1400 Forest Ave., 2014 WL 4467774, at *8. Third, Plaintiff is required to elect its remedy, and, having stated that it is seeking statutory damages (Gagliardi Aff. ¶ 2), it cannot then recover a base amount of statutory damages in excess of the maximum of $10,000, as set forth in the Act. 47 U.S.C. § 605(e)(3)(C)(i)(II).
2. Appropriate Enhancement of Damages
Plaintiff further requests that, under 47 U.S.C. § 605(e)(3)(C)(ii), its damages be enhanced, as Fantasy Bar Corp.'s violation of Section 605 was purportedly both "willful" and for commercial gain. (Proposed Findings ¶¶ 38-39, 41.) Specifically, Plaintiff requests that its base statutory damages be trebled. (See id. ¶ 47.)
Section 605(e)(3)(C)(ii) provides, in pertinent part, that, "[i]n any case in which the court finds that the violation was committed willfully and for purposes of direct or indirect commercial advantage or private financial gain, the court in its discretion may increase the award of damages, whether actual or statutory, by an amount of not more than $100,000 for each violation of subsection (a)."
"Courts use a variety of factors in determining whether a defendant's conduct is subject to enhanced damages for willfulness, such as allegations of: (1) repeated violations over an extended period of time; (2) substantial unlawful monetary gains; (3) significant actual damages to plaintiff; (4) defendant's advertising for the intended broadcast of the event; and (5) defendant's charging a cover charge or charging premiums for food and drinks." Kingvision Pay-Per-View Ltd. v. Rodriguez, No. 02cv07972 (SHS), 2003 WL 548891, at *2 (S.D.N.Y. Feb. 25, 2003); see also J&J Sports Prods., Inc. v. Kosoria, No. 06cv02102 (KMK), 2007 WL 1599168, at *3 (S.D.N.Y. June 1, 2007). "An award of enhanced damages ensures that a willful defendant's profits are disgorged and aims to deter similar acts of cable piracy in the future." Sugar Café, Inc., 2018 WL 324266, at *2 (internal quotation marks and citations omitted).
Although Plaintiff has not shown that Fantasy Bar Corp. engaged in a pattern of violations or that it advertised on the night of the boxing match, Plaintiff does allege willful behavior that likely resulted in a substantial, unlawful financial gain. For example, Plaintiff's investigator states in his affidavit that he paid a $30 cover charge to enter Fantasy Bar while the fight was being exhibited (see Armour Aff., at 1; Gagliardi Aff. ¶ 17), which, if paid by each of the approximately 76 patrons in the establishment that night, would alone have resulted in revenue of $2,280. This revenue, coupled with additional amounts that Fantasy Bar Corp. received from the "increase in patrons" who likely visited the establishment because of the exhibition of the fight, and "who, in turn, likely purchased food and/or drinks while viewing the event," presumably led to Fantasy Bar Corp.'s reaping a significant commercial profit from its unlawful conduct, justifying a damage enhancement. Kosoria, 2007 WL 1599168, at *3; see also Time Warner Cable of New York City v. Googies Luncheonette, Inc., 77 F. Supp. 2d 485, 490 (S.D.N.Y. 1999) (enhanced damages "can be seen to encompass [the establishment's] profits on the sale of food and drink"); Sugar Café, Inc., 2018 WL 324266, at *2 (enhanced damages justified by $35 cover charge); J&J Sports Prods., Inc. v. Onyx Dreams, Inc., No. 12 Civ. 5355 (SLT) (LB), 2013 WL 6192546, at *6 (E.D.N.Y. Nov. 26, 2013) ($20 cover charge); Paquita's Café, Inc., 2007 WL 2783190, at *4-5 ($10 cover charge).
In Entm't by J&J, Inc. v. Mama Zee Rest. & Catering Servs., Inc., No. 01 Civ. 3945, 2002 WL 2022522 (E.D.N.Y. May 21, 2002), the court multiplied the cover charge by the number of patrons present and then added that figure to the base statutory damages, see id., at *4 (citing Kingvision Pay-Per-View, Inc. v. Prime Time Saloon, Inc., No. 95 Civ. 1422, 1996 U.S. Dist. LEXIS 23187, at *13 (E.D.N.Y. Sep. 30, 1996)). Then, in determining the extent to which those damages should be enhanced, the court invoked the cover charge again, as a factor justifying the enhancement. See id. This approach, which arguably results in a double recovery (given that one purpose of enhanced damages is to require a defendant to disgorge its profits), has generally not been followed in this district. Rather, courts in this district have typically considered evidence of cover charges only in connection with the enhancement of damages. See, e.g., Sugar Café, Inc., 2018 WL 324266, at *2.
Plaintiff additionally alleges that the display of the fight at Fantasy Bar could not have been "mistakenly, innocently or accidentally intercepted," and therefore that the unauthorized display must have been willful. (See Gagliardi Aff. ¶ 9; Proposed Findings ¶ 39.) Plaintiff has outlined some potential means by which the establishment could have unlawfully intercepted the program, including by obtaining and installing an unauthorized "descrambler," misrepresenting itself as a residence, or splicing the program from an adjacent residence. (See Gagliardi Aff. ¶ 9.) Regardless of the means used, courts have found that the reception of a closed-circuit broadcast requires the performance of a deliberate act, and that this is sufficient to establish a defendant's willfulness. See Googie's Luncheonette, 77 F. Supp. 2d at 490 ("Signals do not descramble spontaneously, nor do television sets connect themselves to cable distribution systems."); see also Kosoria, 2007 WL 1599168, at *3; Onyx Dreams, 2013 WL 6192546, at *6.
As authority for its proposal that the Court multiply the base award of statutory damages in this case by a factor of three, Plaintiff cites a line of cases from the Eastern District that have taken this approach to the enhancement of damages. (See id. ¶¶ 45-46 (citing J&J Sports Prods. v. Hot Shots, Inc., No. 09 Civ. 1884 (FB) (SMG), 2010 WL 3522809, at *3 (E.D.N.Y. Apr. 27, 2010) (recommending trebling for willfulness), report & recommendation adopted, 2010 WL 3523003 (E.D.N.Y. Sep. 2, 2010); J&J Sports Prods. v. Forbes, No. 07 Civ. 4394 (ENV), 2008 WL 5263732, at *6 (E.D.N.Y. Dec. 17, 2008) (same) (adopting report and recommendation); J&J Sports Prods. v. Rodrigues, No. 05 Civ. 5805 (RJD), 2007 WL 1726462, at *7 (E.D.N.Y., Apr. 19, 2007) (same); J&J Sports Prods. v. Drake, No. 06 Civ. 246 (ILG), 2006 WL 2927163, at *5 (E.D.N.Y. Oct. 11, 2006) (same) (adopting report and recommendation).)
The practice of trebling statutory damages, however, has generally not been followed by courts in this district, which, on the basis of similar factual allegations, have instead tended to award a flat sum as enhanced damages. See, e.g., Sugar Café, Inc., 2018 WL 324266, at *2 (awarding enhanced damages of $8,000 where the defendant charged a $35 cover); Paquita's Café, Inc., 2007 WL 2783190, at *5 (awarding enhanced damages of $10,000 where the defendant charged a $10 cover); Kingvision Pay-Per-View, Ltd. v. Jasper Grocery, 152 F. Supp. 2d 438, 442 (S.D.N.Y. 2001) (awarding enhanced damages of $10,000 to account for increased profits from customers drawn in by the fight); Hernandez, 2008 WL 4974583, at *6 (adopting report and recommendation recommending an award of $10,000 in enhanced damages).
Based on the record presented in this case and the precedent that has been developed in this district, and to achieve the statutory goals of compensation and deterrence, see Zalazar, 653 F. Supp. 2d at 343, I recommend that Plaintiff be awarded enhanced damages of $10,000 from defendant Fantasy Bar Corp., in addition to $6,000 in base statutory damages, as discussed above, for a total of $16,000 in statutory damages.
3. Costs
Where a Section 605 violation has been demonstrated, a plaintiff is entitled to recover reasonable attorneys' fees and costs. See 47 U.S.C. § 605(e)(3)(B)(iii). As discussed above, Plaintiff seeks costs in this case, but has expressly declined to seek attorneys' fees. (See Proposed Findings. ¶ 51; see also supra n.2.) Plaintiff seeks a total of $470 in litigation costs, including $400 for a filing fee and $70 for a fee charged by a process server. (See id. ¶ 50.) While the payment of the filing fee is reflected on the Court's Docket (see Dkt. 1), Plaintiff has not submitted any invoice or other documentation to show the costs associated with the process server. I therefore recommend that only $400 in costs be awarded.
C. Damages and Costs Recoverable From Defendant Dominguez
Plaintiff is apparently requesting that defendant Dominguez, the principal of Fantasy Bar Corp., be held jointly and severally liable for all damages - including enhanced damages - awarded against Fantasy Bar Corp. (See generally Compl.; Proposed Findings.) While this Court finds a sufficient basis for assessing $6,000 in statutory damages (and $400 in costs) against both Fantasy Bar Corp. and Dominguez, it does not agree with Plaintiff's apparent position that Dominguez should also be held liable for any additional damages that the Court may properly assess against the corporation for its presumed willful violations of the Act.
Relying on the reasoning of Second Circuit decisions regarding copyright law, several courts in this district have concluded that, where an individual defendant is shown to have had "a right and ability to supervise" the Communications Act violations of a corporate defendant and "a strong financial interest" in the unauthorized activities, no more need be established to find the individual defendant vicariously liable for the corporation's conduct. See J&J Sports Prods., Inc. v. Meyers, No. 06cv05431 (BSJ) (JCF), 2007 WL 2030288, at *3 (S.D.N.Y. July 16, 2007) (quoting Softel, Inc. v. Dragon Med. & Sci. Commc'ns, Inc., 118 F.3d 955, 971 (2d Cir. 1997); Shapiro, Bernstein & Co., Inc. v. H.L. Green Co., 316 F.2d 304, 307 (2d Cir. 1963) (internal quotation marks omitted)), report & recommendation adopted, 2007 WL 6080268 (S.D.N.Y. Sept. 10, 2007); see also J&J Sports Prods., Inc. v. Ribeiro, 562 F. Supp. 2d 498, 501 (S.D.N.Y. 2008); Joe Hand Promotions, Inc. v. Phillips, No. 06cv03624 (BSJ) (JCF), 2007 WL 2030285, at *3 (S.D.N.Y. July 16, 2007), report & recommendation adopted, 2007 WL 2245351 (S.D.N.Y. Aug. 3, 2007); Kingvision Pay-Per-View, Ltd. v. Olivares, No. 02cv06588 (JES) (RLE), 2004 WL 744226, at *5 (S.D.N.Y. Apr. 5, 2004), report & recommendation adopted by Order, dated June 14, 2004 (Dkt. 17 in 02cv06588).
Further, in finding that an individual defendant need not be shown to have had actual knowledge of a Communications Act violation in order to be held liable, these courts have not distinguished between liability for statutory damages and for enhanced damages. Rather, on damages inquests, these courts have simply accepted that boilerplate language in the pleadings, alleging that individual defendants had a supervisory capacity over and a direct financial interest in the infringing activities, is sufficient to find vicarious liability for both statutory and enhanced damages. See Meyers, 2007 WL 2030288, at *3; Ribeiro, 562 F. Supp. 2d at 501; Phillips, 2007 WL 2030285, at *3; Olivares, 2004 WL 744226, at *5.
Recently, however, one decision from this district, Sugar Café, Inc., 2018 WL 324266, scrutinized the issue more closely, and determined that such allegations were insufficient for the plaintiff to meet its burden of proving enhanced damages with reasonable certainty. In that case, the court reasoned that, where the pleadings, taken as true, merely established that an individual defendant had a financial interest and a right and ability to supervise, the plaintiff had not shown a sufficient "evidentiary basis" for the proposition that this defendant had acted willfully for the purposes of Section 605(e)(3)(C)(ii). Sugar Café, Inc., 2018 WL 324266, at *1, 3 (citing Metro Found. Contractors Inc., 699 F.3d at 234); see id., at *3 ("Plaintiff has not established, for example, that [the individual defendant] was personally involved in approving the decoding of the signal or otherwise knew that the fight was being unlawfully intercepted."). This Court finds this reasoning sound.
As seems typical in these types of cases, Plaintiff here has pleaded that Dominguez had "a right and ability to supervise the infringing activities" of Fantasy Bar Corp. as well as "a direct financial gain" from those activities (Compl. ¶¶ 5, 16-17, 33, 49; see also Proposed Findings ¶¶ 25, 27), allegations that, taken as true in view of Dominguez's default, are sufficient to support a finding of vicarious liability and thus an award of statutory damages against her. Nothing about these allegations, however, speaks to the question of whether Dominguez personally engaged in knowing, willful conduct that, under the Communications Act, would warrant an award against her of enhanced damages. Under the circumstances, while I recommend that the Court hold Dominguez jointly and severally liable for Plaintiff's statutory damages of $6,000 in this case (as well as for Plaintiff's costs), I do not recommend that she be held liable for the additional $10,000 in enhanced damages that I have recommended be assessed against Fantasy Bar Corp. See Sugar Café, Inc., 2018 WL 324266, at *3 (holding individual defendant liable for statutory damages only).
D. Pre-Judgment Interest
Plaintiff seems to have made inconsistent requests regarding an award of pre-judgment interest in this case. (Compare Proposed Findings ¶ 47 ("Plaintiff should be awarded $30,528.60 plus interest, costs and disbursements" (emphasis added)) with id. ¶ 53 (requesting damages and costs, without referencing pre-judgment interest).) Moreover, in its calculations, Plaintiff has not specifically set forth any interest that it may be seeking. In any event, even if this Court were to construe Plaintiff's submissions as requesting pre-judgment interest in this case, I would recommend that such a request be denied.
Although no statute authorizes an award of pre-judgment interest for violations of Sections 553 and 605 of the Communications Act, a district court has discretion to impose a pre-judgment interest award "to make a plaintiff whole." Williams v. Trader Publ'g Co., 218 F.3d 481, 488 (5th Cir. 2000); see Garden City Boxing Club, Inc. v. Rojas, No. 05 Civ. 1047 (DGT), 2006 WL 3388654 (E.D.N.Y. Nov. 21, 2006). Further, the Second Circuit has recognized that pre-judgment interest may be permitted without express statutory authorization "when the awards [are] fair, equitable and necessary to compensate the wronged party fully." Wickham Contracting Co., Inc. v. Local Union No. 3, IBEW, 955 F.2d 831, 836 (2d Cir. 1992), cert. denied, 506 U.S. 946 (1992).
Here, if enhanced damages are awarded in this case as recommended above, it is likely that Plaintiff would be made whole by the total award, without need for pre-judgment interest to serve that purpose. See, e.g., Garden City Boxing Club, Inc. v. Ayisah, No. 02cv06673 (GBD) (DF), 2004 U.S. Dist. LEXIS 7867, at *16 (S.D.N.Y. Apr. 28, 2004) (recommending that the Court decline to award pre-judgment interest, on similar facts, because "plaintiff [would] be more than fully compensated for its lost licensing fees and any interest it could have earned on such fees" by virtue of the damages otherwise awarded by the court (internal quotation marks and citation omitted)), report & recommendation adopted by Order, dated June 7, 2004 (Dkt. 28 in 02cv06673).
Furthermore, as the recommended statutory and enhanced damages are, in part, punitive in nature, an award of pre-judgment interest would not be appropriate in this case. See Wickham Contracting Co., Inc., 955 F.2d at 834 (noting that pre-judgment interest should not be awarded "if the statutory obligation on which interest is sought is punitive in nature"); Garden City Boxing Club, Inc. v. Guerra, 05 Civ. 3712 (SLT), 2007 WL 539156, at *5 (E.D.N.Y. Feb. 16, 2007) (declining to award pre-judgment interest "because New York law does not award pre-judgment interest on punitive damages, and damages under § 605 are 'analogous to punitive damages in that they are designed to deter others from similar infringing activity'" (quoting Olivares, 2004 WL 744226, at *5); Paquita's Cafe, Inc., 2007 WL 2783190, at *5, n.6 (same); see also Garden City Boxing Club, Inc. v. Rosado, No. 05 Civ. 1037 (DLI) (JMA), 2005 U.S. Dist. LEXIS 27108, at *12-14 (E.D.N.Y. Oct. 6, 2005), report & recommendation adopted, 2005 U.S. Dist. LEXIS 29744 (E.D.N.Y. Nov. 9, 2005).
This Court therefore recommends that Plaintiff not be awarded pre-judgment interest in this case.
CONCLUSION
For the reasons set forth above, I recommend:
(1) that a default judgment be entered in favor of the plaintiff, J&J Sports Productions, Inc., and against the defendant, Fantasy Bar and Restaurant Corp. d/b/a Fantasy Bar & Restaurant, in the amount of:
(a) $6,000 in statutory damages,
(b) $10,000 in enhanced damages, and
(c) $400 in costs,
for a total of $16,400;
(2) that, on the default judgment, defendant Martina Fermin Dominguez be held jointly and severally liable with defendant Fantasy Bar and Restaurant Corp. for the amounts of $6,000 in statutory damages and $400 in costs (but not for the $10,000 in enhanced damages), for a total award against her of $6,400; and
(3) that no pre-judgment interest on damages be awarded in this case.
Pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure, the parties shall have fourteen (14) days from service of this 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 the Court, with courtesy copies delivered to the chambers of the Honorable John G. Koeltl, United States Courthouse, 500 Pearl Street, Room 1330, New York, New York, 10007, and to the chambers of the undersigned, 500 Pearl Street, Room 1660, New York, New York, 10007. Any requests for an extension of time for filing objections must be directed to Judge Koeltl. FAILURE TO FILE OBJECTIONS WITHIN FOURTEEN (14) DAYS WILL RESULT IN A WAIVER OF OBJECTIONS AND WILL PRECLUDE APPELLATE REVIEW. See Thomas v. Arn, 474 U.S. 140, 155 (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. Canadair Ltd., 838 F.2d 55, 58 (2d Cir. 1988); McCarthy v. Manson, 714 F.2d 234, 237-38 (2d Cir. 1983). Dated: New York, New York
September 20, 2018
Respectfully submitted,
/s/_________
DEBRA FREEMAN
United States Magistrate Judge Copies To: Hon. John G. Koeltl, U.S.D.J. Plaintiff's counsel (via ECF) Fantasy Bar & Restaurant
23 E. Tremont Ave.
Store 4
Bronx, NY 10453 Ms. Martina Fermin Dominguez
23 E. Tremont Ave.
Store 4
Bronx, NY 10453