Opinion
01 Civ. 4825 (GEL)(KNF)
November 5, 2002
REPORT AND RECOMMENDATION
I. INTRODUCTION
In this action, Cablevision Systems New York City Corporation ("Cablevision") alleges that Raymond Treio ("Treio") engaged in the illegal interception of cable television programming signals, in violation of the Cable Communications Policy Act, as amended, 47 U.S.C. § 553(a)(1) and 605(a).
Upon defendant's failure to file an answer or otherwise respond to the Complaint, your Honor ordered that a default judgment be entered against him. 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 against Treio.
The Court directed Cablevision 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 attorneys' fees. Treio was 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 he deemed appropriate. Defendant did not file any papers in opposition to plaintiffs submissions. Plaintiffs submissions aver that it is entitled to $20,000 in statutory damages and $1,938 in costs and attorneys' fees.
For the reasons stated below, I recommend that Cablevision be awarded $11,938: statutory damages pursuant to 47 U.S.C. § 605 in the amount of $10,000, attorneys' fees in the amount of $1,758, and costs in the amount of $180.
II. BACKGROUND AND FACTS
Based upon the submissions by plaintiff, the Complaint filed in the instant action — the allegations of which perforce of defendant's default must be accepted as true, 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) — and the Court's review of the entire court file in this action, the following findings of fact are made:
Cablevision is a corporation organized and existing under the laws of the state of Delaware, which is authorized to conduct business in New York State. Cablevision has its principal business office at 111 Stewart Avenue, Bethpage, New York, it also has an office at 930 Soundview Avenue, Bronx, New York. Complaint, ¶ 4, at 2. Treio is an individual having a principal residence at 880 Boynton Avenue, Apartment #4K, Bronx, New York 10473. See id., ¶ 5, at 2.
Cablevision offers cable television services to subscribers who request and pay for them. See id., ¶ 7, at 2-3. Cablevision provides various tiers of programming services. "Basic" service is a level of service to which an individual can subscribe at a monthly rate and receive enhanced quality reception of broadcast stations, as well as a small number of additional programming services. See Affidavit of Director of Security for Cablevision Chuck Carroll ("Carroll Aff."), ¶ 3, at 1-2. "Family" service is a higher level of service to which a customer can subscribe at a monthly rate and receive all of Cablevision's programming services, with the exception of its premium and pay-per-view programming services. "Optimum" service includes all programming available under "Family" service plus certain premium stations. See id.
Cablevision's residential subscribers may also elect to subscribe to one or more premium services such as Cinemax, Home Box Office or Showtime, for an additional monthly charge per service, or pay-per-view programming, which includes movies, sporting events and other entertainment, for a per-event fee. See id. ¶ 4, at 2. Premium services range in price from $1.95 to $14.95 per month per service; packages of premium services cost between $40.75 and $80.95 per month. Cablevision's pay-per-view service includes selections which range in price from $4.50 to $49.95 per selection, and are offered continuously over a 24-hour period. See id., ¶ 5, at 2. The aggregate value of each individual pay-per-view event offered over a typical month, assuming each pay-per-view event is viewed only once, is hundreds of dollars. See id.
Cablevision provides its cable television service to subscribers by way of subscription agreements. Cablevision agrees to provide the programming services requested by a subscriber in return for the subscriber's agreement to pay for those services on a monthly basis. See id. ¶ 6, at 2. Cablevision's subscribers pay a monthly fee for the type of programming services they have selected and purchased from Cablevision. Each Cablevision subscriber is entitled to receive only the level and amount of cable programming and services for which that subscriber has paid. See id. ¶ 7, at 2-33.
As part of its cable service, Cablevision provides each of its subscribers with equipment known as a converter-decoder. Cablevision programs the equipment so that each subscriber can receive and view only the level and amount of cable programming he or she has selected and purchased, and is authorized to receive. The rental fee for the converter-decoder provided by plaintiff to its subscribers is regulated by the Federal Communications Commission on an actual cost basis. The fee is included on the subscriber's monthly bill. See id. ¶ 8, at 3.
Cablevision receives the signals to its cable television programming services from orbiting satellites and local radio towers. The theft of cable programming is commonly known as cable "piracy" See id., ¶ 13, at 4.
In order to protect its cable programming from theft and unauthorized reception, Cablevision encrypts or "scrambles" the signals to all programming which a subscriber has not purchased and is not authorized to receive. When Cablevision's programming is in a scrambled mode, it is distorted and unviewable to a subscriber who has not paid for such programming. Scrambling is a principal security measure used by Cablevision and other cable television operators to protect their programming services against authorized reception. See id., ¶¶ 9, 13, at 3-4.
Either by technical modification or computer command, Cablevision authorizes the converter-decoders provided to its subscribers to descramble reception of only those programming channels which a subscriber has purchased. See id., ¶ 10, at 3. The converter-decoders which Cablevision provides to its subscribers have a technology feature and function known as "addressability." Addressability is a communication link between a cable operator's central computer and the descrambling of computer circuitry in each converter-decoder provided to its subscribers. See id., ¶ 11, at 4.
There is a "black market" industry of various manufacturers, vendors, and distributors of "pirate" converter-decoders. These "pirate" converter-decoders are sold to cable subscribers who use these devices to avoid paying a cable operator's subscription fees for the authorized reception of premium and pay-per-view cable television programming. A cable operator's authorized converter-decoder can also be modified into a "pirate" converter-decoder by inserting unauthorized integrated circuits, commonly known as "chips," into that device or by electronically reprogramming the device. "Pirate" converter-decoders enable their users to receive all scrambled premium and pay-per-view cable television programming in a descrambled mode, regardless of whether such services have been paid for or whether the user is authorized to receive such programming. With a "pirate" converter-decoder, the addressability technology is disabled so that the cable operator is unable to communicate with the "pirate" converter-decoder or even recognize that it has been attached to its cable system. See id., ¶ 14, at 4-5.
Treio became a Cablevision subscriber on July 7, 1994. At that time, Treio subscribed to Cablevision's "Family" level of service, for which he paid $41.40 per month. See id., ¶ 18, at 6. On July 18, 1994, Treio purchased a "pirate" converter-decoder device from Teleview/Omega Holdings, L.L.C. — JRC Products, Inc. (Teleview) for $199. On January 31, 1995, Treio purchased a second converter-decoder device from Teleview for $399. See id., ¶ 19, at 6. Cablevision had investigated Teleview previously and had discovered that it was engaged in the sale and distribution of "pirate" converter-decoder devices. By federal court order, a civil seizure was executed at the business premises of Teleview; hundreds of "pirate" cable television descrambling devices were found and all of Teleview's business records were seized and delivered to Cablevision. See id., ¶ 16, at 5.
The information obtained by Cablevision from Teleview's records included, among other things, evidence of transactions between Teleview and Treio involving the purchase of "pirate" converter-decoder devices on the dates in question. See id., ¶ 17, at 5. The type of converter-decoder devices purchased by Treio are capable of defeating the encryption technology used by Cablevision in its Bronx, New York cable television system. The converter-decoders are, therefore, capable of descrambling Cablevision's cable television signals in that area which, in turn, permits a user to receive all of Cablevision's television programming without authorization and without payment. See id., ¶ 20, at 6.
Treio knew that the use of the "pirate" converter-decoder devices obtained from Teleview would allow him to intercept and receive all scrambled, premium and pay-per-view programming offered by Cablevision without having to pay for these services. Indeed, there is no legitimate function in a cable system for a "pirate" converter-decoder of the type sold by Teleview and purchased by Treio. Its sole function is to enable its user to receive unauthorized cable television programming without having to pay for that service. See id., ¶ 22, at 7.
III. CONCLUSIONS OF LAW
47 U.S.C. § 553 and 605 both prohibit the unauthorized interception and reception of cable programming 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]); Cablevision Systems New York City Corp. v. Lokshin, 980 F. Supp. 107, 112 (E.D.N.Y. 1997).
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).
"In contrast to section 553, which by its statutory language applies only to transmissions via cable systems, section 605(a) applies to 'the interception of cable-borne, as well as over-the-air, pay television' where cable-borne transmissions originate as satellite transmissions." Lokshin, 980 F. Supp. at 112 (quoting Sykes, 75 F.3d at 130). Therefore, "when pay television programming is transmitted over both cable and satellite mediums, both statutes apply . . ." Lokshin, 980 F. Supp. at 112 (citing Sykes, 75 F.3d at 130).
Cablevision's premium and pay-per-view programming is sent to Cablevision from orbiting satellites. See Carroll Aff., ¶ 9, at 3. Accordingly, Cablevision's cable programming services are protected from unauthorized reception under 47 U.S.C. § 605(a). See Barnes, 13 F. Supp.2d at 548 (citations omitted).
Defendant purchased two "pirate" converter-decoder devices from Teleview. These devices would permit one to view Cablevision's premium and pay-per-view cable television signals without authorization. See Carroll Aff., ¶¶ 20-21, at 6-7. Since the defendant was previously provided with an authorized converter-decoder from Cablevision, it is reasonable to conclude that the defendant's purpose in purchasing "pirate" equipment from Teleview was to receive unauthorized cable television programming. In any event, defendant's default has left the Court without any factual basis upon which to reach an alternative conclusion respecting the use to which defendant put the converter-decoders he purchased. In light of the above, the Court finds that defendant violated 47 U.S.C. § 553(a)(1) and 605(a).
Cablevision possesses "proprietary rights" in the communications which Treio intercepted, and is thus a "person aggrieved" within the meaning of 47 U.S.C. § 553(c)(1) and 605(e)(3)(A).
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. Barnes, 13 F. Supp.2d at 548; American Cablevision of Queens v. McGinn, 817 F. Supp. 317, 320 (E.D.N.Y. 1993). For violations of both sections 553 and 605, an aggrieved cable operator is entitled to elect to recover damages under section 605 in consideration of section 605's higher damages award. Barnes, 13 F. Supp.2d at 548 (citations omitted).
Cablevision has elected to recover statutory damages against defendant, rather than actual damages. Section 605(e)(3) authorizes the court to award statutory damages of "not less than $1,000 or more than $10,000, as the court considers just." 47 U.S.C. § 605(e)(3)(C)(i)(II).
Plaintiff avers that the defendant's default has prevented Cablevision from discovering evidence establishing how long the defendant received unauthorized programming services subsequent to defendant's purchase of illegal descrambling equipment. In addition, plaintiff contends that the defendant's purchase of this equipment was wilful. See Plaintiffs Mem. of Law in Support of Inquest, at 7. Plaintiff, therefore, seeks an award of statutory damages in the amount of $20,000. An award of that amount would be inappropriate.
Treio became a Cablevision subscriber on July 7, 1994; on that date, he subscribed to the "Family" level of service. Treio purchased one "pirate" converter-decoder device on July 18, 1994, and a second such device on January 31, 1995. The Complaint in this action was filed on June 1, 2001. Therefore, the Court finds that the defendant's unauthorized usage encompassed approximately 83 months (from the date of the purchase of the first converter-decoder device in 1994 until the date on which the instant action was commenced).
The record reflects that the full range of Cablevision's premium programming channels, not including pay-per-view events, is offered at an average cost to a residential subscriber of approximately $80.95 per month. See Carroll Aff. ¶ 4, at 2. Therefore, since the monthly subscriber fee for the defendant's "Family" level of service was $41.40, it is reasonable to conclude that, beginning in July 1994, defendant was receiving unauthorized free access to programming valued at $39.55 per month. Accordingly, $3,282.65 in unpaid premium programming fees were lost by Cablevision.
The aggregate value of each pay-per-view event offered over a typical month, assuming each pay-per-view event is viewed only once, is hundreds of dollars per month. See Carroll Aff. ¶ 5, at 2. However, to conclude that Treio watched each and every pay-per-view selection offered, on each day for the 83-month period, is unreasonable.
Cablevision's pay-per-view events range in cost from $4.50 to $49.50. See id. Based on these costs, the Court finds that an average value of $125 per month for the defendant's unauthorized free access to Cablevision's pay-per-view events is appropriate. See, e.g., Lokshin, 980 F. Supp. at 113 (finding award of $125 per month for unauthorized pay-per-view services to be reasonable). Under the circumstances, $10,375 is the reasonable value of the pay-per-view selections plaintiff might have viewed without making the requisite payment to Cablevision. This sum takes into consideration Treio's 83 months of unauthorized usage. As a result, Cablevision should be awarded $10,000, the maximum statutory amount under 47 U.S.C. § 605(e)(3)(C)(i)(II), for the defendant's use of a "pirate" decoding device. In reaching this determination the Court also considers Treio's failure to appear in this action, which illustrates his indifferent attitude toward the Communications Law. See Cablevision Systems New York City Corp. v. Faschitti, 1996 WL 48689, at *2 (S.D.N.Y. Feb. 7, 1996) (citing Cable/Home Communication Corp. v. Network Prods., Inc., 902 F.2d 829, 852 [11th Cir. 1990] [recognizing goal of deterrence and noting that court may consider party's attitude in determining statutory damages award]).
Accordingly, the Court finds that the plaintiff is entitled to an award of $10,000, pursuant to 47 U.S.C. § 605, for the defendant's use of a "pirate" decoding device to intercept illegally plaintiffs cable televison programming services.
47 U.S.C. § 605 authorizes a court to "direct the recovery of full costs, including the award of reasonable attorney's fee to an aggrieved party who prevails." See 47 U.S.C. § 605(e)(3)(B)(iii).
When fixing a reasonable rate for attorney fees, it is appropriate for a court to consider and to apply the prevailing market rates in the relevant community for similar legal work of lawyers of reasonably comparable skill, experience and reputation. See Blum v. Stenson, 465 U.S. 886, 895, n. 11, 104 S.Ct. 1541, 1547 n. 11 (1984). In addition, it is permissible for a court to rely upon its own knowledge of private firm hourly rates in deciding what reasonable attorney fees are in the community. Miele v. N.Y. State Teamsters Conf. Pens. Retirement Fund, 831 F.2d 407, 409 (2d Cir. 1987).
In the Second Circuit, a party seeking an award of attorney 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 fee applications that do not contain such supporting data "should normally be disallowed." Id. at 1154.
In prosecuting this action against Treio, Cablevision engaged the service of the law firm Lefkowitz, Louis Sullivan, LLP. William E. Primavera ("Primavera"), an attorney with that law firm, submitted an affirmation to the Court setting forth: (a) the names of the attorneys and paralegals who worked on this matter; (b) the professional experience of those persons; (c) the number of hours each person devoted to this action; and (d) the nature of the work each person performed. In addition, Primavera averred that certain work done by attorneys and paralegals of the law firm was performed at a set fee, pursuant to a fee schedule previously agreed upon by plaintiff and counsel.
Contemporaneous time records for the relevant law firm personnel were submitted to the Court. The time records indicate that plaintiff incurred attorney fees through the work performed by the following law firm personnel:
William B. Jung, Esq.: 0.50 hours @ $165 per hour
William E. Primavera, Esq.: 1.80 hours @ $145 per hour
Draft Summons and Complaint @ $300
Alfonso N. Cava, Paralegal: 2.70 hours @ $85 per hour
Janine Zabbia, Paralegal: 1.00 hours @ $85 per hour
Draft Papers re Damages @ $800
Based upon the nature of this case, the Court's review of the submissions by Cablevision, which outline the services performed by counsel, and the Court's understanding of the hourly rates charged by private law firms in the community, the Court concludes that $1,758 in attorneys' fees were reasonably incurred by Cablevision in connection with prosecuting this action against Treio. Plaintiff also seeks to recover $180 in costs: $150 incurred in filing fees, and $30 incurred in serving the defendant with the Summons and Complaint. This request is reasonable and should be granted.
IV. RECOMMENDATION
For the reasons set forth above, the Court recommends an award to Cablevision of $11,938 for damages, costs and attorneys' fees incurred in prosecuting this action against Treio.
V. FILING 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 Gerard E. Lynch, United States District Judge, 40 Centre Street, Room 803, New York, New York 10007, and to the chambers of the undersigned, 40 Centre Street, Room 540, New York, New York 10007. Any requests for an extension of time for filing objections must be directed to Judge Lynch. FAILURE TO FILE OBJECTIONS WITHIN TEN (10) DAYS WILL RESULT IN A WAIVER OF OBJECTIONS AND WILL PRECLUDE APPELLATE REVIEW. See Thomas v. Am, 474 U.S. 140 (1985); TUE 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. 1998); McCarthy v. Manson, 714 F.2d 234, 237-38 (2d Cir. 1983)