Opinion
No. SA-99-CA-880-WWJ, (Consolidated with SA-99-CA-881 and SA-99-CA-987)
July 31, 2001
REPORT AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE
Pursuant to the order of referral in the above-styled and numbered cause of action to the undersigned United States Magistrate Judge and consistent with the authority vested in United States Magistrate Judges under the provisions of 28 U.S.C. § 636(b)(1)(B) and rule 1(d) of the Local Rules for the Assignment of Duties to United States Magistrates, effective January 1, 1994, in the Western District of Texas, the following Report is submitted for your review and consideration.
Docket no. 92.
I. JURISDICTION
The Court has jurisdiction under 28 U.S.C. §§ 1331, 1367, 2201, and 2202.
II. PROCEDURAL HISTORY
Causes of action were filed against defendants Armando B. Gutierrez d/b/a Armando's Bar-B-Q Inn, (the "Inn") and Armando B. Gutierrez, individually (collectively "Gutierrez"), by three individual plaintiffs — Top Rank, Inc. ("Top Rank") on August 17, 1999; Entertainment by JJ, Inc. ("EJJ") on August 17, 1999; and Prostar, Inc. ("Prostar") on September 8, 1999 (collectively "plaintiffs"). On January 11, 2000, these three cases were consolidated in cause number SA-99-CA-880-FB. The cases generally concern the allegedly unauthorized broadcasts of championship boxing matches in violation of 47 U.S.C. §§ 553 and 605. EJJ and Prostar allege that on September 13, 1997, Gutierrez illegally broadcast a match between Oscar de la Hoya and Hector Camacho and Top Rank alleges that on September 18, 1998, Gutierrez illegally broadcast the match between Oscar de la Hoya and Julio Cesar Chavez. Gutierrez answered, generally denying the allegations.
Docket no. 1.
Cause No. SA-99-CA-881, docket no. 1.
Cause No. SA-99-CA-987, docket no. 1.
Docket no. 21. On May 10, 2001, the consolidated case was reassigned to District Court Judge William Wayne Justice, docket no. 132, and the cause number was modified to SA-99-CA-880-WWJ.
Docket no. 1 in each case. The Court notes that docket no. 16, Prostar's first amended complaint and live pleading also alleges violations of §§ 553 and 605.
Docket nos. 1 in SA-99-CA-880, 881; docket no. 16 in SA-99-CA-987.
Docket nos. 2 in SA-99-CA-880, 881 and docket no. 4 in SA-99-CA-987.
On January 20, 2000, Gutierrez filed counterclaims against plaintiffs seeking a declaration that Gutierrez had not violated 47 U.S.C. §§ 553 and 605. On February 10, 2000, Gutierrez filed a first amended original answer and counterclaims. In addition, Gutierrez filed affirmative defenses based on accord and satisfaction and laches as well as alleging that plaintiffs' causes of action are barred by their own licenses and that Gutierrez purchased broadcasts of the matches at issue from an authorized cable operator and had authorization to view the matches. Gutierrez also filed a third-party claim against third-party defendant Paragon Communications, Inc., d/b/a Time Warner Cable and f/k/a Paragon Cable ("Time Warner") for indemnity and contribution. Plaintiffs answered Gutierrez's counterclaims.
Docket no. 26. The same day, the District Court denied plaintiffs' motion to dismiss the counterclaims, (docket no. 25), an argument which was included in plaintiffs' response to Gutierrez's motion for leave to file the counterclaim (docket no. 16).
Docket no. 30.
Id. at 12.
Id. at 15. All references to third-party defendants in this report are to "Time Warner" regardless of whether the company was, at the time in question, doing business under a predecessor name.
Docket no. 35, Top Rank, filed February 23, 2000; docket no. 36, EJJ, filed February 23, 2000; and docket no. 44, Prostar, filed March 21, 2000.
On February 14, 2000, Time Warner filed a motion to dismiss the third-party complaint for failure to state a claim for relief and alternative motion for summary judgment. Gutierrez, on February 18, 2000, filed a response to the motion to dismiss and a motion for leave to amend the third-party complaint. On March 10, 2000, Time Warner filed a motion to dismiss for lack of subject matter jurisdiction and amended motion to dismiss for failure to state a claim for relief. On March 29, 2000, the District Court denied Time Warner's motion and amended motion to dismiss for failure to state a claim for relief, motion to dismiss for lack of subject matter jurisdiction, and motion for summary judgment. In addition, the District Court granted Gutierrez's motion for leave to amend, and the amended third-party complaint was filed on March 29, alleging breach of contract, breach of a third-party beneficiary contract, and violation of the Texas Deceptive Trade Practices Act ("DTPA").
Docket no. 31.
Docket no. 32.
Docket no. 33.
Docket no. 37.
Docket no. 46.
Id.
Docket no. 51.
Time Warner filed its motion for summary judgment against Gutierrez on September 13, 2000, and Gutierrez filed a motion for summary judgment against plaintiffs on September 14, 2000. The parties responded and replied to the motions for summary judgment. The District Court referred the case to a magistrate judge for disposition of all pretrial matters on September 26, 2000. On March 1, 2001, the undersigned entered a report recommending Time Warner's motion for summary judgment be granted in part and denied in part and that Gutierrez's motion for summary judgment be denied. On June 6, 2001, the District Court accepted the report in its entirety and held that:
Docket no. 86.
Docket no. 87.
See docket nos. 100, 101, 102, 103, 104, 106, and 108. The undersigned notes that on January 9, 2001, Time Warner filed a motion to extend the time to file dispositive motions in order that it might file a supplemental motion for summary judgment. Docket no. 114. The motion was denied on January 16, 2001 (docket no. 117) and Time Warner filed objections to and an appeal from that order (docket no. 119). On June 6, 2001, the District Court overruled the objections and dismissed the appeal (docket no. 138).
Docket no. 92. On February 1, 2001, the case was referred to the undersigned. Docket no. 120.
Docket no. 123.
1. Gutierrez's motion for summary judgment against plaintiffs was denied.
2. Time Warner's motion for summary judgment was granted in part and denied in part such that:
a. summary judgment as to Gutierrez's breach of third-party beneficiary contract was granted and the claim was dismissed;
b. summary judgment as to Gutierrez's claim of October 1997 misrepresentations in violation of the DTPA was granted and the claim was dismissed;
c. summary judgment as to Gutierrez's DTPA claim for breach of implied warranty was granted and the claim was dismissed;
d. summary judgment as to Gutierrez's DTPA claim for unconscionable conduct was granted and the claim was dismissed;
e. summary judgment as to Gutierrez's breach of implied contract was denied;
f. summary judgment as to Gutierrez's claim of misrepresentation of authority to provide the Chavez fight in 1998 in violation of the DTPA was denied.
Docket no. 140. Initially, Prostar also named Alfredo 0. Esquivel, individually and d/b/a The New Mug Club and Joe Basquez, individually and d/b/a Pecan Grove as defendants. On December 16, 1999, Prostar filed a first amended complaint which omitted Joe Basquez as a party and named instead, Conception Sierra Vasquez, individually and d/b/a Pecan Grove. (Docket no. 16). They were not parties to the motions for summary judgment. The District Court dismissed Prostar's claims against Basquez because he was no longer named as a defendant; dismissed the claims against Esquivel, individually and d/b/a The New Mug Club; and dismisses the claims against Vasquez, individually and d/b/a Pecan Grove for failure to prosecute.
On March 12, 2001, a suggestion of the death of Annando B. Gutierrez was filed, and motions to substitute the Estate of Armando B. Gutierrez ("Estate"), as administered by Raul X. Villareal, subsequently were filed. On July 11, 2001, the undersigned entered an Order granting the motion to substitute the Estate for Armando B. Gutierrez and to substitute Raul X. Villareal as the administrator of the Estate in place of Armando B. Gutierrez.
Docket no. 125.
Docket. nos. 137, 142, 143, and 147.
Docket no. 157.
On May 14, 2001, Time Warner filed a motion for leave to file a motion to dismiss Gutierrez's third-party complaint or, alternatively, a motion for summary judgment. The motion for leave states that the motion is opposed by Gutierrez, Top Rank, and EJJ, but not opposed by Prostar. On May 24, 2001, Gutierrez filed a response to the motion for leave to file which addresses the merits of the proposed motion to dismiss and requests that leave to file be denied, or alternatively, if leave is granted, that the motion to dismiss be denied. Top Rank and EJJ requested and were granted several unopposed motions for extension of time to respond to the motion for leave to file. On July 17, 2001, Top Rank and EJJ filed their opposition to the motion for leave to file which addresses the merits of the proposed motion to dismiss and asks that the motion to dismiss be denied. On July 27, 2001, Time Warner filed its reply to the opposition.
Docket no. 133.
Docket no. 134.
docket nos. 135, 136, 146, 148, 153, and 155.
Docket no. 158. Because Prostar had not filed a response addressing the merits of the proposed motion to dismiss, on July 20, 2001, the Court entered an Order requiring Prostar to file any such response on or before July 27, 2001. Docket no. 161. As of the time of the issuance of this report, the docket sheets do not reflect Prostar has filed any response.
Docket no. 162.
III. SUMMARY OF ARGUMENTS
Time Warner has moved for leave to file a motion to dismiss Gutierrez's third-party complaint against Time Warner or alternative motion for summary judgment. Because the deadline for filing dispositive motions was January 10, 2001, the Court construes Time Warner's motion for leave to file as request to file an out-of-time motion. Time Warner argues as "good cause" for the out-of-time motion the death of Armando B. Gutierrez ("Mr. Gutierrez") and the failure of any claims, those against Gutierrez as well as Gutierrez's claims against Time Warner, to survive his death.In its proposed motion to dismiss the third-party complaint or alternative motion for summary judgment, Time Warner argues that plaintiffs Top Rank, EJJ, and Prostar claims against Gutierrez based on 47 U.S.C. §§ 553 and 605 are penal in nature and did not survive his death. Time Warner also argues that because Gutierrez's third-party claims against Time Warner are contingent on the success of plaintiffs' causes of action, the third-party claims should be dismissed.
Id., proposed motion to dismiss at 3-4.
Id. at 5.
Gutierrez argues that Time Warner has failed to acknowledge that the third-party claims for breach of an implied contract and for misrepresentation in violation of the DTPA are independent of plaintiffs' claims. Gutierrez also argues that under Texas law the breach of implied contract and DTPA claims survive Mr. Gutierrez's death. Gutierrez takes no position on whether plaintiffs' claims survived Mr. Gutierrez's death. Finally, Gutierrez seeks sanctions against Time Warner and its attorneys under Rule 11 of the Federal Rules of Civil Procedure for filing a frivolous motion. Time Warner's reply does not address whether Gutierrez's independent claims for breach of implied contract and violations of the DTPA survive Mr. Gutierrez's death.
Docket no. 134 at 2-3.
Id. at 4-5.
Id. at 2.
Id.; docket no. 141 at 3. Docket no. 141 is a sur-reply for which Gutierrez did not file a motion for leave to file or state that the parties had conferred. However, because the sur-reply was filed on June 7, 2001 and no party has objected to the filing, the sur-reply has been considered in this report.
Docket no. 139.
Top Rank and EJJ argue that because their claims under §§ 553 and 605 seek remedial damages rather than penalties, the claims have survived Mr. Gutierrez's death. In addition, Top Rank and EJJ reiterate Gutierrez's argument that the third-party complaint pleads causes of action independent of plaintiffs' claims.
Docket no. 158 at 8-11.
Id. at 2.
IV. ANALYSIS
A. Motion for Leave to FileAlthough Time Warner's arguments regarding Mr. Gutierrez's death and the alleged failure of any claims to survive his death facially state good cause for allowing the filing of a dispositive motion after the expiration fo the motions deadline, the Court concludes that the motion for leave to file in part should be denied. Time Warner argues that Gutierrez's third-party claims are contingent upon the success of plaintiffs' causes of action which did not survive Mr. Gutierrez's death. However, the District Court's June 6, 2001 Order held that Gutierrez's breach of implied contract and DTPA claims were "distinct from simple indemnity claims" and did "not bear the indicia of disguised indemnity claims." Time Warner's May 14, 2001 motion for leave to file does not argue alternatively that the independent claims for breach of an implied contract and for DTPA violations do not survive Mr. Gutierrez's death. Nor does Time Warner's June 5, 2001 reply to Gutierrez's response, which argues the independent nature of Gutierrez's claims, address the issue. Although Time Warner's motion was filed on May 14, 2001, before the District Court's June 6, 2001 Order, Time Warner has not sought to amend the motion for leave to file or the proposed motion to dismiss to address the determination that Gutierrez's breach of implied contract and DTPA claims were distinct from any indemnity claims which might have been alleged.
Docket no. 140 at 4.
Docket no. 139.
Docket no. 134.
For these reasons, to the extent Time Warner asks for leave to file an out-of-time dispositive motion to address an argument on which the District Court has ruled, Time Warner has not stated "good cause" and the Court recommends that Time Warner's motion for leave to file a motion to dismiss Gutierrez's third-party complaint on that issue should be denied.
B. Motion to Dismiss
In order to present a comprehensive report to the District Court with respect to the arguments presented in Time Warner's proposed dispositive motion, which contends that plaintiffs' §§ 553 and 605 claims did not survive Mr. Gutierrez's death, the report considers the merits of the motion to dismiss or alternative motion for summary judgment. First, because Time Warner has not moved to dismiss Gutierrez's independent breach of implied contract and DTPA claims, the Court recommends that the motion to dismiss Gutierrez's third-party claims against Time Warner should be denied to the extent the motion may apply to those claims. To the extent that Gutierrez has pleaded claims against Time Warner for indemnity for any liability imposed on Gutierrez for plaintiffs' allegations of violations of §§ 553 and 605, which the District Court found were not affirmatively barred by statute or case law cited by Time Warner, the report addresses whether the §§ 553 and 605 claims survived Mr. Gutierrez's death. This report also considers Gutierrez's request for Rule 11 sanctions against Time Warner.
Docket no. 140 at 4 ("The second flaw in Time Warner's argument is that indemnity claims under 47 U.S.C. § 553 and 605, have not been affirmatively barred.").
§§ 553 and 605
Alleging that Gutierrez violated 47 U.S.C. §§ 553 and 605, Top Star, EJJ, Prostar each seek statutory damages pursuant to § 553 of $10,000, plus an additional $50,000 in the event Gutierrez' s conduct is found to be willful; and, pursuant to § 605, statutory damages of $10,000, plus an additional $100,000 for willful conduct. Sections 553 and 605 provide that the recovery of statutory damages within minimum and maximum limits may be increased if certain conditions are proven. Section 553 provides in relevant part that:
Cause Nos. SA-99-CA-880, docket no. 1 at 8; SA-99-CA-88 1, docket no. 1 at 8; SA-99-CA-987, docket no. 16 at 7. Prostar also seeks actual damages.
47 U.S.C. § 553(c)(3)(A)(ii), B, C and 605(e)(3)(C)(i)(II), (ii), (iii). These sections alternatively allow the recovery of actual damages. §§ 553(c)(3)(A)(i) and 605(e)(3)(C)(i)(I). The sections also provide that the minimum statutory damage award can be decreased to a specific minimum if the court finds the "violator was not aware and had no reason to believe that his acts constituted a violation." §§ 553(c)(3)C and 605(e)(3)(C)(iii).
(c)(3)(A) Damages awarded by any court under this section shall be computed in accordance with either of the following clauses:
(ii) the party aggrieved may recover an award of statutory damages of all violations involved in the action, in a sum of not less than $250 or more than $10,000 as the court considers just.
(B) In any case in which the court finds that the violation was committed willfully and for purposes of commercial advantage or private financial gain, the court in its discretion may increase the award of damages, whether actual or statutory under subparagraph (A), by an amount of not more that $50,000.
§ 553(c)(3)(A)(ii), B.
Section 605 provides in relevant part that:
(e)(3)(C)(i) Damages awarded by any court under this section shall be computed, at the election of the aggrieved party, in accordance with either of the following subclasses;
(II) the party aggrieved may recover an award of statutory damages for each violation of subsection (a) of this section involved in the action in a sum not less that $1,000 or more than $10,000, as the court considers just, and for each violation of paragraph (4) of this subsection involved in the action an aggrieved party may recover statutory damages in a sum not less than $10,000, or more than $100,000, as the court considers just.
(ii) 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 that $100,000.
The text of subsection (e)(4) is set forth in footnote 61 below and is not applicable to this case.
Time Warner argues that an award of statutory damages under either § 553 or § 605 is penal in nature and that plaintiffs' claims for such damages did not survive Mr. Gutierrez's death.
Docket no. 133, proposed motion to dismiss at 4.
The question of whether a federal cause of action survives the death of a party is one decided under federal common law. "Traditionally, the rule has been that actions for penalties do not survive the death" of a party. To determine whether the remedy sought is remedial or penal, the court should consider: "(a) whether the purpose of the action was to redress individual wrongs or wrongs to the public; (b) whether the recovery ran to the individual or public; (c) whether the recovery was disproportionate to the harm suffered."
James v. Home Construction Co. of Mobile, Inc., 621 F.2d 727, 729 (5th Cir. 1980) (deciding whether a cause of action under the Truth-in-Lending Act survived death).
Id. at 730 (citing Schrieber v. Sharpless, 110 U.S. 76, 80, 3 S.Ct. 423, 424 (1884) (deciding that copyright claim, which sought penalties and forfeitures rather that actual damages, did not survive death of defendant)).
James, 621 F.2d at 730.
In International Cablevision, Inc. v. Sykes, the only case to decide the whether a cause of action under § 605 survives the death of a party and a case cited by Time Warner, Sykes, who allegedly sold one cable television descrambler in violation of § 605(e)(4), died before the case against him was resolved. In determining whether to substitute Sykes' wife as defendant for the limited purpose of imposing damages after summary judgment had been granted, a New York District Court considered as one factor whether International Cablevision's claims had survived Sykes' death. Applying the three-part test, the court found that the purpose of § 605 was to redress an individual wrong and that recovery went to the individual, but also found that statutory damages pursuant to § 605(e)(3)(C)(i)(II), with a minimum of $10,000 and a maximum of $100,000 as applied to paragraph (4), were clearly disproportionate to the harm suffered by International Cablevision. Although the court noted that "Congress had enacted the statutory damages because of the difficulty in proving damages resulting from the installation of a descrambler," the court concluded that Congress did not intend "to allow plaintiffs to completely avoid the obligation to prove the actual damages that they have suffered[.]" The court found that International Cablevision had made no attempt to prove any actual damages, and further found it "very difficult to believe that one cable descrambler, even if it were used over a period of several years, could result in damages of over $10,000 to plaintiff." The court concluded that the statutory damages were penal in nature and did not survive Sykes' death.
172 F.R.D. 63 (W.D. N.Y. 1997)
Docket no. 133, proposed motion to dismiss at 4.
Section 605(e)(4) provides that:
Any person who manufactures, assembles, modifies, imports, exports, sells, or distributes any electronic, mechanical, or other device or equipment, knowing or having reason to know that the device or equipment is primarily of assistance in the unauthorized decryption of satellite cable programming, or direct-to-home satellite services, or is intended for any other activity prohibited by subsection (a) of this section, shall be fined not more than $500,000 for each violation, or imprisoned for not more than 5 years for each violation, or both. For purposes of all penalties and remedies established for violations of this paragraph, the prohibited activity established herein as it applies to each such device shall be deemed a separate violation.
Sykes, 172 F.R.D. at 65.
The New York District Court had previously granted a summary judgment in favor of International Cablevision on a § 553 claim but had dismissed a § 605 claim. Id. (citing International Cablevision, Inc. v. Noel, 859 F. Supp. 69, 77 (W.D. N.Y. 1994), vacated,International Cablevision, Inc. v. Sykes, 75 F.3d 123 (2nd Cir.), cert. denied, Noel v. International Cablevision, Inc., 519 U.S. 929 (1996)). However, "the Second Circuit vacated this court's decision, finding that defendant John Sykes' conduct violated section 605(e)(4), and remanded the case for imposition of mandatory damages under section 605. Id. (citing International Cablevision, Inc. v. Sykes, 75 F.3d 123 (2nd Cir.), cert. denied, Noel v. International Cablevision, Inc., 519 U.S. 929 (1996)). Sykes died after the case was remanded. At some point prior to the district court's 1993 decision in Noel the cases were consolidated for joint briefing and then were consolidated on appeal. See Sykes, 75 F.3d at 126-29 for discussion of the procedural history of the cases.
Id. at 67.
Id. at 65, 68-69.
Id. at 68.
Id. at 68-69.
Id. at 69.
Time Warner argues that, as in Sykes, plaintiffs' request for the maximum amount of statutory damages is disproportionate to the harm and plaintiffs have not made any attempt to demonstrate actual damages. Although Sykes is persuasive, the Court concludes the instant case is procedurally and factually distinct. In Sykes, the New York District Court was determining whether a claim based on § 605(e)(4) survived Sykes' death, after the court had ruled favorably on plaintiff International Cablevision's motion for summary judgment in which plaintiff necessarily had to show there was no genuine issue of material fact as to liability and the amount of damages plaintiff should receive. The district court found that International Cable had done little more than establish that Sykes sold one descrambler and that to impose the minimum damages of $10,000 for a violation § 605(e)(4) based on that evidence would provide relief disproportionate to the harm suffered.
Because Time Warner does not argue that the damages at issue redress public wrongs or run to the public, those prongs of the three-part test will not be addressed.
In one of its reply briefs, docket no. 162, Time Warner cited a decision entered by Judge Briones in KingVision Pay-Per-View, Ltd. v. Valles, No. EP-00-CA-179-DB, 2001 WL 682205 (W.D. Tex. March 30, 2001), as support for its position that the damages sought by plaintiffs were "punitive." As with Sykes, the undersigned concludes that Valle is procedurally distinct from the instant case. Although the issue in Valles was a violation of § 605, the District Court granted default judgment as to six defendants. Id. at * 1. In Valles, plaintiff King Vision was required to prove its entitlement to damages and the Court entered findings on defendants liability. In the present case, the District Court has made no findings regarding liability such that plaintiffs would be required to prove damages.
The issue in the present case is whether plaintiffs' claims for damages, as pleaded, can survive Mr. Gutierrez's death and a motion to dismiss. As discussed in the prior report on the motion for summary judgment, plaintiffs claim that Gutierrez violated §§ 553(a) and 605(a). At this point in the present proceedings, plaintiffs have not been compelled to demonstrate damages, but have pleaded Gutierrez's failure to pay license fees, diminished revenues, deprivation of subscribers, and damaged business reputation. Plaintiffs are not seeking the greater statutory damages for an alleged violation of § 605(e)(4), as was at issue in Sykes. The question in this case is whether the statutory damages available to rectify the harm caused by Gutierrez' s alleged violations are remedial or penal; specifically, whether the damages available are disproportionate to the harm suffered.
When considering a Rule 12(b)(6) motion to dismiss, the Court must take as true the allegations contained in plaintiffs complaint.Fernandez-Montez v. Allied Pilots Assoc., 987 F.2d 278 (5th Cir. 1993). The undersigned notes that Time Warner has filed an alternative motion for summary judgment. It would appear the motion for summary judgment properly reflects that Time Warner is asking the Court to consider Mr. Gutierrez's death, a matter which occurred after the filing of the third-party complaint. However, the undersigned further notes that Time Warner argues "plaintiffs Top Rank and J J . . . are not even seeking actual damages. Nor can the plaintiffs demonstrate any actual damages." Docket no. 133, proposed motion to dismiss at 3-4. Arguably, Time Warner may be moving for summary judgment on the issue of damages. Under the statutory scheme of §§ 553 and 605, plaintiffs may alternatively recover statutory damages and do not have to also seek actual damages. 47 U.S.C. § 553(c)(3)(A) and 605(e)(3)(C)(i). As to the question of whether plaintiffs can demonstrate damages, plaintiffs are seeking damages from Gutierrez, and it not clear that Time Warner, a third-party defendant who may have contingent liability, is entitled to challenge the proof of a claim for which it has not been directly sued. Once Gutierrez's liability is determined, then the District Court can resolve the issue of Time Warner's contingent liability, if any. For these reasons, the undersigned construes Time Warner's motion as a motion to dismiss.
Docket no. 123.
Cause Nos. SA-99-CA-880, docket no. 1 at 6-8; SA-99-CA-881 docket no. 1 at 6-8; SA-99-CA-987, docket no. 16 at 5-6.
The Fifth Circuit has not directly addressed the issue of whether claims under §§ 553 and 605 are remedial or punitive. However, the Supreme Court has held that the remedies provided by the Copyright Act are remedial in nature. Further, the Fifth Circuit in Prostar v. Massachi, held that the provisions for damages under the Federal Communications Act were most similar to those provided under the Copyright Act in holding that the statute of limitations for copyright causes of action applied to claims under §§ 553 and 605. The Fifth Circuit said in Massachi:
Brady v. Daly, 175 U.S. 148, 153, 20 S.Ct. 62, 64 (1899); see also Raydiola Music v. Revelation Rob, Inc., 729 F. Supp. 369, 3 74-75 (D. Del. 1990) (citing Brady when determining that defendant's Seventh Amendment right to jury trial was not triggered by Copyright Act because the remedy was remedial).
239 F.3d 669 (5th Cir. 2001).
Id. at 677 (citing Kingvision Pay Per View, Ltd v. Boom Town Saloon, Inc., 98 F. Supp.2d 958 (N.D. Ill. 2000)).
[B]oth statutes have similar remedial structures. For instance the FCA and the Copyright Act allow for statutory and actual damages. Both acts give the court discretion to increase the statutory damage award for willful violations. Finally, both acts also provide for the award of costs and attorney's fees.
Massachi, 239 at 677 (emphasis added).
As it did for the statute of limitations, the Fifth Circuit likely could hold the nature of claims and the available remedies under §§ 553 and 605 are sufficiently similar to the Copyright Act such that the statutory damages structure of §§ 553 and 605 is remedial.
See Valles, 2001 WL 682205 at * 1 ("statutory damages serve both a compensatory and punitive function").
Apart from the 5th Circuit's rendition of this novel issue, taking plaintiffs' allegations as true for the purpose of the motion to dismiss, the Court cannot conclude at this point that any damages would be disproportionate to the harm suffered such that the damages should be considered punitive rather than remedial. Although plaintiffs have each sought the maximum statutory damages of $10,000 available for violations of these statutes and seek additional damages for willful conduct, the Court may in its discretion impose the minimum statutory damages available under the sections — $250 for § 553 and $1,000 for § 605 — or some amount between the minimum and maximum, as supported by the evidence.
Like plaintiffs here, in Valles, King Vision sought maximum statutory damages. Valles, 2001 WL 682205 at *1. Although King Vision had not provided "documentation or other competent evidence showing any significant actual damages or, conversely, substantial unlawful monetary gains by the Defendants" and an award of maximum statutory damages was found to be excessive, the District Court assessed damages against each defendant at $2000 plus $10,000 for willful conduct.
Therefore, the Court concludes that plaintiffs' claims are remedial and survive Mr. Gutierrez's death. The Court recommends that Time Warner's motion to dismiss should be denied on that basis.
Request for Sanctions
Gutierrez has requested Rule 11 sanctions be imposed on Time Warner and its attorney because the motion to dismiss is not "legally justified and is only made for the sake of increasing the cost of litigation for Gutierrez." Time Warner did not respond to the request for sanctions.
Docket no. 134 at 2.
Under Rule 11, FED. R. CIV. P. sanctions may be imposed upon an attorney for presenting a pleading for any improper purpose. The Fifth Circuit in Sheets v. Yamaha Motors Corp., U.S.A., discussed the obligations under FED. R. CIV. P. 11 as follows:
The signature of an attorney or party constitutes a certificate by the signer that the signer has read the pleading, motion, or other paper; that to the best of the signer's knowledge, information, and belief formed after reasonable inquiry it is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law, and that it is not interposed for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation.
Sheets v. Yamaha Motors Corp., U.S.A., 891 F.2d 533, 535 (5th Cir. 1990).
There are three recognized grounds upon which Rule 11 sanctions may be imposed: the pleading or motion was "(1) not well grounded in fact; (2) not warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law; and (3) interposed needlessly and solely for purposes of delay."
Sheets, 891 F.2d at 536.
The Thomas v. Capital Security Services, Inc., "snapshot" rule, provides that Rule 11 "review focuses upon the instant when the picture is taken — when the signature is placed on the document." Under this rule, a Court focuses on whether, at the time it was signed, the paper was well grounded in fact and warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law, and avoids taking the benefit of hindsight.
836 F.2d 866 (5th Cir. 1988).
Thomas, 836 F.2d at 874.
To determine whether a filing caused harassment, the focus is upon objectively ascertainable circumstances rather than subjective intent. "If a reasonably clear legal justification can be shown for the filing of the paper in question, no improper purpose can be found and sanctions are inappropriate." If the court determines that a violation of Rule II has occurred, the court "shall" impose sanctions.
Sheets, 891 F.2d at 538.
Sheets, 891 F.2d at 538 (quoting National Ass'n of Gov't Employees, Inc. v. National Fed'n of Fed. Employees, 844 F.2d 216, 224 (5th Cir. 1988)).
Upon considering the posture of the case at the time the motion for leave to file and attached proposed motion to dismiss or alternative motion for summary judgment were filed, the Court cannot conclude that sanctions are warranted. At the time of filing, the District Court had not adopted the report and determined that Gutierrez filed independent claims for breach of implied contract and for violations of the DTPA. In filing the motion, counsel was re-urging Time Wamer's position that Gutierrez's claims were entirely contingent upon the success of plaintiffs' claims. Although counsel relied on Sykes, which can be distinguished, the case does offer some support for Time Warner's argument that plaintiffs' claims and Gutierrez's contingent claims did not survive Mr. Gutierrez's death. For these reasons, the Court recommends that Gutierrez's request for sanctions should be denied.
V. CONCLUSION
The Court recommends that Time Warner's motion for leave to file a motion to dismiss the third-party complaint or, alternatively, motion for summary judgment should be DENIED in part. Alternatively, the Court recommends that Time Warner's motion to dismiss or, alternatively, motion for summary judgment should be DENIED. The Court recommends that Gutierrez's request for sanctions should be DENIED.
Docket no. 133.
Id., attachment.
Docket nos. 134 at 6 and 141 at 3.
VI. INSTRUCTIONS FOR SERVICE AND NOTICE OF RIGHT TO OBJECT/APPEAL
The United States District Clerk shall serve a copy of this Report and Recommendation on each and every party either (1) by certified mail, return receipt requested, or (2) by facsimile if authorization to do so is on file with the Clerk. According to 28 U.S.C. § 636(b)(1) and FED. R. Civ. P. 72(b), any party who desires to object to this report must serve and file written objections to the Report and Recommendation within 10 days after being served with a copy unless this time period is modified by the District Court. A party filing objections must specifically identify those findings, conclusions or recommendations to which objections are being made and the basis for such objections; the district court need not consider frivolous, conclusive or general objections. Such party shall file the objections with the Clerk of the Court, and serve the objections on all other parties and the Magistrate Judge. A party's failure to file written objections to the proposed findings, conclusions and recommendations contained in this report shall bar the party from a de novo determination by the District Court. Additionally, any failure to file written objections to the proposed findings, conclusions and recommendations contained in this Report and Recommendation within 10 days after being served with a copy shall bar the aggrieved party, except upon grounds of plain error, from attacking on appeal the unobjected-to proposed factual findings and legal conclusions accepted by the District Court.
See Thomas v. Arn, 474 U.S. 140, 150, 106 S.Ct. 466, 472 (1985).
Douglass v. United Serv. Auto. Ass'n, 79 F.3d 1415, 1428 (1996).