Opinion
06 Civ. 6706 (WHP)(KNF).
July 16, 2007
REPORT RECOMMENDATION
I. INTRODUCTION
In this action, the plaintiff, Joe Hand Promotions, Inc. ("Hand Promotions"), alleges that, on June 25, 2005, the defendants Angela Y. Carter ("Carter"), individually, and as the principal of Little Shop of Harlem a/k/a Satin Doll a/k/a Satin Doll Little Shop of Harlem ("Satin Doll"), and Satin Doll (collectively "defendants") intercepted the satellite transmission of a boxing match between Arturo Gatti and Floyd Maywhether ("The Program"), unlawfully and without authorization, and displayed it to twelve patrons of Satin Doll, thereby violating the Cable Communication Act of 1934, as amended, 47 U.S.C. §§ 553 and 605. The plaintiff alleges further that, in order to intercept the transmission noted above, the defendants modified or utilized a device or equipment knowing or having reason to know that it is used primarily to assist in the unauthorized decryption of satellite cable programming or that it is intended for some other activity prohibited by 47 U.S.C. § 605(a).
Upon the defendants' failure to file an answer or otherwise respond to the complaint, your Honor ordered that a default judgment be entered against them. Thereafter, your Honor referred the matter to the undersigned to conduct an inquest and to report and recommend the amount of damages, if any, to be awarded to the plaintiff by the defendants. The Court directed Hand Promotions to serve and file its proposed findings of fact and conclusions of law, and an inquest memorandum setting forth its proof of damages, costs of this action and its attorney's fees. The defendants were directed by the Court to serve and file any opposing memoranda, affidavits and exhibits, as well as any alternative findings of fact and conclusions of law they deemed appropriate.
The plaintiff's inquest submissions aver that it is entitled to $110,000 from each defendant: $10,000 in statutory damages, pursuant to 47 U.S.C. § 605(e)(3)(i)(II), and $100,000 in enhanced damages, pursuant to 47 U.S.C. § 605(e)(C)(3)(ii). In addition, the plaintiff seeks $1,387.50 in attorney's fees and costs from the defendants, as well as post-judgment interest. The defendants have not filed anything in opposition to the plaintiff's submissions.
The Court notes that in the complaint, the plaintiff requests damages pursuant to 47 U.S.C. § 605(e)(3)(C)(I-ii) and (e)(4).See Compl. at ¶ 36. However, the plaintiff has not requested damages pursuant to 47 U.S.C. § 605(e)(4) in its inquest submissions. Moreover, since the plaintiff's complaint fails to include any factual allegation that the defendants modified equipment for the purpose of intercepting The Program, and only speculates about that, the Court will not consider Section 605(e)(4) when assessing damages for violations of 47 U.S.C. § 605. See Kingvision Pay-Per-View, Ltd. v. Ruiz, No. 04 Civ. 6566, 2005 WL 589403, at *1 (S.D.N.Y. Mar. 9, 2005) (denying the plaintiff's request for damages pursuant to 47 U.S.C. § 605(e)(4) because the plaintiff speculated that the defendants modified equipment, but made no factual allegations concerning that matter.).
II. BACKGROUND
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:
Hand Promotions held the exclusive license to distribute The Program in New York State. As the exclusive distributor, Hand Promotions entered into agreements with various commercial entities that allowed them to display The Program, on June 25, 2005, in their establishments.
Satin Doll is a business entity, the nature of which is unclear. On June 25, 2005, at approximately 11:30 P.M., Lee Packtor, an auditor hired by the plaintiff to investigate illegal interceptions and exhibitions of The Program, observed The Program being broadcast from Satin Doll. The defendants had not acquired authorization to exhibit The Program from Hand Promotions.
However, the Court notes that Satin Doll is referred to as a "store" and a "shop" in an exhibit to the plaintiff's submissions. See Pl.'s Inquest Mem., Ex. B.
III. CONCLUSIONS OF LAW
A default judgment in an action establishes liability, but is not a concession of damages. See Cappetta v. Lippman, 913 F. Supp. 302, 304 (S.D.N.Y. 1996) (citing Flaks v. Koegel, 504 F.2d 702, 707 [2d Cir. 1974]). Damages must be established by the plaintiff in a post-default inquest. See id. In conducting an inquest, a court need not hold a hearing "as long as it [has] ensured that there was a basis for the damages specified in the default judgment." Transatlantic Marine Claims Agency, Inc v. Ace Shipping Corp., 109 F.3d 105, 111 (2d Cir. 1997). The court may rely on affidavits or documentary evidence in evaluating the fairness of the sum requested. See Tamarin v. Adam Caterers, Inc., 13 F.3d 51, 54 (2d Cir. 1993).
Liability
47 U.S.C. §§ 553 and 605 prohibit the unauthorized interception and reception of cable programmng 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 and Noel, 75 F.3d 123, 133 [2d Cir. 1996]).
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).
The defendants' liability to the plaintiff for violations of 47 U.S.C. §§ 553 and 605 has been established by their default in this action. Since the defendants were not among the commercial establishments who contracted with the plaintiff to exhibit The Program, their interception and exhibition of The Program was unauthorized and unlawful.
Damages
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. See, e.g., Barnes, 13 F. Supp. 2d at 548 (citing American Cablevision of Queens v. McGinn, 817 F. Supp. 317, 320 [E.D.N.Y. 1993]).
Hand Promotions has elected to recover damages from the defendants pursuant to Section 605, which authorizes recovery of either actual or statutory damages. See 47 U.S.C. § 605(e)(3)(C)(i)(I-II). 47 U.S.C. § 605(e)(3)(C)(i)(II) authorizes the court to award statutory damages in an amount "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) Section 605(e)(3)(C)(ii) provides further that the court has discretion to increase the award of damages by an amount of no more than $100,000 if it finds that the violation in question was committed willfully and for purposes of commercial advantage or private financial gain.See 47 U.S.C. § 605(e)(3)(C)(ii).
In this case, the plaintiff seeks $10,000 in statutory damages and $100,000 in enhanced damages from each defendant. "The measurement of damages is within the broad discretion of the District Court." See J J Sports Prods., Inc. v. Dehavalen, No. 06 Civ. 1699, 2007 WL 294101, at *2 (S.D.N.Y. Jan. 30, 2007). "The court may impose a damage award on what the 'court considers just.'" Id. (quoting 47 U.S.C. § 605(e)(3)(C)(i)(II)). Typically, courts take a number of factors into account when determining whether an award of statutory damages is "just," including the monetary losses sustained by the plaintiff as a result of the defendant's unauthorized interception and exhibition of a program to which the plaintiff had sole rights to distribute, the defendant's financial circumstances and the burden that damages would place upon a defendant. See id. Courts in this district generally take one of two approaches in determining the amount of statutory damages to award a plaintiff against an establishment which has intercepted and exhibited satellite cable programming unlawfully: (1) a per-patron approach, in which the court multiplies the number of patrons by a dollar amount; or (2) a flat sum approach.See id.; see also Ruiz, 2005 WL 589403, at *2.
In J J Sports, the Court elected to utilize the "per-patron approach" in determining the amount of statutory damages to award the plaintiff. J J Sports, 2007 WL 294101, at *3. The court awarded $1,800 in statutory damages to the plaintiff, based on an admittedly "arbitrary" $150 per patron calculation. See id. The Court found the award was reasonable and sufficient to punish and deter the defendants from future violations of the relevant statute, while taking into account the plaintiff's lost revenue and any profits gained by defendants as an indirect result of their unlawful acts. See id.
In this case, the plaintiff has requested an award of $10,000 per defendant, which is the maximum statutory damages award permitted under 42 U.S.C. § 605(e)(3)(C)(i)(II). However, the plaintiff has not provided information to the Court that supports its request for the maximum statutory damages award. According to the plaintiff's submissions, if the defendants had purchased the right to display The Program at the plaintiff's contractual commercial rate, they would have paid it $800. Moreover, if the twelve patrons of Satin Doll had purchased the right to view The Program at the plaintiff's contractual residential rate, each would have paid it approximately $50. Based on this information, the Court finds that it is not reasonable to award the plaintiff statutory damages that exceed ten times the amount it would have received had the defendants acquired the right to broadcast The Program at the contractual commercial rate, or had each of the defendants' twelve patrons obtained the right to watch The Program in his or her home at the contractual residential rate. Therefore, the Court finds that an award of $1,800 in statutory damages is appropriate. This amount is based on an award of $150 for each of the twelve persons who viewed The Program at Satin Doll, on June 25, 2005. See id. This award takes into account any profits the defendants may have received indirectly as a result of intercepting and exhibiting the program without authorization, and is sufficient to punish and deter the defendants from future violations of the Cable Communications Act.
Given that the plaintiff seeks a judgment against a business entity and its operator for one act, damages should be awarded jointly and severally. See, e.g., Entertainment by J J Inc. v. Medina, No. 01 Civ. 07057, 2002 WL 273306, at *3 (S.D.N.Y. Feb. 26, 2002).
Enhanced Damages
The plaintiff seeks enhanced damages in the amount of $100,000 from the defendants. "In 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) of this section."See 47 U.S.C. § 605(e)(3)(C)(ii).
The defendants' determination, to broadcast a closed-circuit cable program without having received prior authorization to do so, demonstrates their conduct was willful. See Ruiz, 2005 WL 589403, at *2 (finding it unlikely that the defendants gained access to the program accidentally, since they were not authorized to broadcast it); see also Time Warner Cable v. Googies Luncheonette, Inc., 77 F. Supp. 2d 485, 490 (S.D.N.Y. 1999) (noting "[s]ignals do not descramble spontaneously, nor do television sets connect themselves to cable distribution systems."). Moreover, it is reasonable to conclude the persons present at Satin Doll on June 25, 2005, were attracted to the establishment for the purpose of viewing The Program. This is enough to meet the private financial gain requirement for awarding enhanced damages. See J J Sports, 2007 WL 294101 at *3 (awarding $2,000 in enhanced damages despite a lack of evidence that the defendants had advertised the unauthorized programming, profited from food or drink sales, or imposed a cover charge, since the defendants presumably exhibited the program to attract customers or promote community goodwill).
Based on the above, the Court finds that an award to the plaintiff of enhanced damages in the amount of $2,000 is warranted.
Attorney's Fees and Costs
47 U.S.C. § 605 authorizes a court to "direct the recovery of full costs, including awarding reasonable attorneys' fees to an aggrieved party who prevails." See 47 U.S.C. § 605(e)(3)(B)(iii).
When fixing the appropriate amount to be awarded for attorney's fees, the Second Circuit Court of Appeals has directed that the "presumptively reasonable fee" method be employed. See Arbor Hill Concerned Citizens Neighborhood Ass'n v. County of Albany, ___ F.3d ___, 2007 WL 2004106 (2d Cir. July 12, 2007). To determine what a presumptively reasonable fee is, a court has to decide upon a reasonable hourly rate, bearing in "mind all of the case-specific variables that [the Second Circuit] and other courts have identified as relevant to the reasonableness of attorney's fees." These variables include: "(1) the time and labor required; (2) the novelty and difficulty of the questions; (3) the level of skill required to perform the legal service properly; (4) the preclusion of employment by the attorney due to acceptance of the case; (5) the attorney's customary hourly rate; (6) whether the fee is fixed or contingent; (7) the time limitations imposed by the client or the circumstances; (8) the amount involved in the case and the results obtained; (9) the experience, reputation, and ability of the attorneys; (10) the "undesirability" of the case; (11) the nature and length of the professional relationship with the client; and (12) awards in similar cases." Arbor Hill, 2007 WL 2004106, at *4, n. 3 (citingJohnson v. Ga. Highway Express, Inc., 488 F.2d 714, 717-719 [5th Cir. 1974]). In the final analysis, a reasonable hourly rate is "the rate a paying client would be willing to pay." Id. at *7.
A party seeking an award of attorney's 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's fee applications that do not contain such supporting data "should normally be disallowed." Id. at 1154.
In prosecuting this action against Carter and Satin Doll, Hand Promotions engaged the service of the law firm Lonstein Law Office, P.C. Julie Cohen Lonstein, Esq. ("Lonstein"), an attorney with that firm, submitted an affidavit to the Court setting forth: (a) the number of hours she and a paralegal devoted to this action, as well as the nature of the work they performed; and (b) their hourly rates.
Contemporaneous time records were also submitted to the Court. The time records indicate that the plaintiff incurred attorney's fees for 3.25 hours of work Lonstein performed, at an hourly rate of $200, and for 2.50 hours of work the paralegal performed, at an hourly rate of $75.
Based upon the factors identified in Arbor Hill, which the Court has considered, the Court's review of the submissions made by Hand Promotions, which identify the services performed by counsel and support staff, the Court's understanding of the hourly rates charged by private law firms in the community, and the Court's understanding that corporate clients, like the plaintiff, often negotiate with their attorneys to pay the lowest fee necessary to litigate their case effectively, see Arbor Hill, 2007 WL 2004106, at *7, the Court finds that: (1) the above-noted hourly rates are reasonable, and (2) $837.50 in attorney's fees were reasonably incurred by Hand Promotions in prosecuting this action against Carter and Satin Doll. Accordingly, granting the plaintiff's requested award for attorney's fees is appropriate. The plaintiff also seeks to recover $550 in costs, based on $350 in filing fees and $200 it expended serving the defendants. This request is reasonable.
IV. RECOMMENDATION
For the reasons set forth above, I recommend the plaintiff be awarded $3,800 against the defendants, jointly and severally. I recommend further that the plaintiff recover attorney's fees, in the amount of $837.50, and costs, in the amount of $550, from the defendants. Post-judgment interest be should awarded to Hand Promotions in an amount to be calculated by the Clerk of Court, pursuant to 28 U.S.C. § 1961(a).V. FILING OF 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 William H. Pauley III, United States District Judge, 500 Pearl St., Room 2210, New York, New York 10007, and to the chambers of the undersigned, 40 Centre St., Room 540, New York, New York 10007. Any requests for an extension of time for filing objections must be directed to Judge Pauley. 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. 1988); McCarthy v. Manson, 714 F.2d 234, 237-38 (2d Cir. 1983).