Opinion
For DISH Network L.L.C., EchoStar Technologies L.L.C., NagraStar LLC, Plaintiffs: Timothy M Frank, Hagan Noll and Boyle LLC, Houston, TX.
ORDER GRANTING PLAINTIFFS' MOTION FOR DEFAULT JUDGMENT
MARGARET M. MORROW, UNITED STATES DISTRICT JUDGE.
On November 5, 2014, DISH Network LLC (" DISH Network"), EchoStar Technologies LLC (" EchoStar"), and NagraStar LLC (" NagraStar") (collectively " plaintiffs") filed this action against José Hernandez, alleging claims for violation of the Digital Millennium Copyright Act (" DMCA"), 17 U.S.C. § 1201(a)(1), the Federal Communications Act (" FCA"), 47 U.S.C. § 605(a), and the Electronic Communications Privacy Act (" ECPA"), 18 U.S.C. § § 2511(1)(a) and 2520(a). On January 2, 2015, the clerk entered Hernandez's default. On January 28, 2015, plaintiffs filed a motion for entry of default judgment against Hernandez. Plaintiffs seek statutory damages, attorneys' fees, and injunctive relief requiring Hernandez to cease circumventing DISH Network's security measures in order to obtain unauthorized access to its programming. Pursuant to Rule 78 of the Federal Rules of Civil Procedure and Local Rule 7-15, the court found the matter appropriate for decision without oral argument; the hearing calendared for April 27, 2015, was therefore vacated, and the matter taken off calendar.
Complaint, Docket No. 1 (Nov. 5, 2014).
Default by Clerk Entered, Docket No. 11 (Jan. 2, 2015).
Motion for Default Judgment Against José Hernandez. (" Motion"), Docket No. 13 (Jan. 28, 2015).
Id. at 7, 11, 15.
I. FACTUAL ALLEGATIONS
DISH Network uses a direct broadcast satellite system to transmit video, audio, and data of various forms of entertainment to its subscribers and pay-per-view customers in the United States and its territories. EchoStar provides the equipment that enables DISH Network to route its programming to customers, while NagraStar provides network security through a " conditional access system." The access system manages the programming a consumer has requested, and is designed to prevent unauthorized decryption of programming through the use of a smart card that is unique to each customer. The smart cards receive messages from EchoStar's receivers and provide a control word that is sent through the receiver to the DISH Network satellite to decrypt the message. The customer is then able to view programming on his or her television.
Complaint, ¶ ¶ 9-10. DISH network has purchased licenses to broadcast various copyrighted works. (Id., ¶ ¶ 11-12.)
Id, ¶ ¶ 14-15.
Id., ¶ ¶ 15-16.
Id., ¶ 17.
Id., ¶ 18.
Unauthorized decryption, or pirating, involves the provision of " 'free-to-air' or 'FTA' receivers" that circumvent DISH Network security with software that contains proprietary data and keys that mimic the smart cards. In response to DISH Network's regular updates of its security measures, piracy technology has developed an internet key sharing (" IKS") system, which accesses the control words generated by NagraStar's smart cards. IKS servers are connected to legitimate NagraStar smart cards, and send valid control words over the internet to unauthorized users who subscribe to pirating services such as NFusion Private Server (" NFPS").
Id., ¶ ¶ 19-20. 11 Id., ¶ 21.
Id., ¶ 21.
Access to legitimate smart cards is purportedly what makes protecting against and preventing piracy difficult. (Id., ¶ 24.)
Id., ¶ ¶ 22-23.
The complaint alleges that Hernandez purchased subscriptions to NFPS in 2010, 2011, and 2013, and used an FTA receiver that had the piracy software necessary to obtain control words from the NFPS server. Hernandez purportedly used control words to decrypt DISH Network satellite signals and to view DISH Network programming without paying a subscription fee or onetime pay-per-view fee. The complaint alleges that Hernandez intentionally caused " imminent and irreparable harm" to each plaintiffs revenue and goodwill that cannot be adequately remedied at law; it asserts that, if the alleged conduct does not cease, plaintiffs will be required to make frequent and costly security updates.
NFPS business records allegedly show that Hernandez purchased subscriptions on October 30, 2010, December 2, 2011, and February 18, 2013. (Id., ¶ 26.)
Id., ¶ ¶ 26-27.
Id., ¶ 27.
[Matter No Available]
II. DISCUSSION
A. Rule 55 of the Federal Rule of Civil Procedure and Local Rule 55-1
A court may enter judgment against a party whose default has been taken pursuant to Rule 55(b) of the Federal Rules of Civil Procedure. See PepsiCo, Inc. v. California Security Cans., 238 F.Supp.2d 1172, 1174 (C.D. Cal. 2002); Kloepping v. Fireman's Fund, No. C 94-2684 TEH, 1996 WL 75314, *2 (N.D. Cal. Feb. 13, 1996).
Before a court can enter default judgment against a defendant, the plaintiff must satisfy the procedural requirements for default judgments set forth in Rules 54(c) and 55 of the Federal Rules of Civil Procedure, as well as Local Rule 55-1. Local Rule 55-1 requires that a party moving for default judgment submit a motion: (1) indicating when and against which party default has been entered; (2) identifying the pleading as to which default has been entered; (3) indicating whether the defaulting party is an infant or incompetent person, and if so, whether that person is represented by a general guardian, committee, conservator or other representative; (4) stating that the Servicemembers Civil Relief Act, 50 App. U.S.C. § 521, does not apply; and (5) affirming that notice has been served on the defaulting party if required by Rule 55(b)(2). CA CD L.R. 55-1, 55-2; PepsiCo, Inc., 238 F.Supp.2d at 1174.
Rule 54(c) states that " judgment by default shall not be different in kind from or exceed in amount that prayed for in the demand for judgment." Fed.R.Civ.Proc. 54(c).
Rule 55(a) provides that the clerk must enter a party's default " [w]hen a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise." Fed.R.Civ.Proc. 55(a). Rule 55(b)(2) requires service on the defaulting party if that party has appeared in the action. Fed.R.Civ.Proc. 55(b)(2) (" If the party against whom a default judgment is sought has appeared personally or by a representative, that party or its representative must be served with written notice of the application at least 3 days before the hearing"); see also, e.g., In re Roxford Foods, Inc., 12 F.3d 875, 879 (9th Cir. 1993) (noting that Rule 55(b)(2) notice " is only required where the party has made an appearance"). As Hernandez has not appeared, service was not required. Plaintiffs, however, filed a proof of service indicating that they served the motion for default judgment on Hernandez on January 28, 2015. (See Proof of Service, Docket No. 13-8 (Jan. 28, 2015).)
Once a party's default has been entered, the factual allegations of the complaint, except those concerning damages, are deemed to have been admitted by the non-responding party. See Fed.R.Civ.Proc. 8(b)(6); see also, e.g., Geddes v. United Fin. Group, 559 F.2d 557, 560 (9th Cir. 1977) (stating the general rule that " upon default[, ] the factual allegations of the complaint, except those relating to the amount of damages, will be taken as true"). The court, however, must still " consider whether the unchallenged facts constitute a legitimate cause of action, since a party in default does not admit mere conclusions of law." 10A Charles Alan Wright, Arthur R. Miller, & Mary Kay Kane, Federal Practice and Procedure: Civil 3d § 2688, at 63 (1998) (footnote omitted); see also Cripps v. Life Ins. Co. of N. Am., 980 F.2d 1261, 1267 (9th Cir.1992) (" [N]ecessary facts not contained in the pleadings, and claims which are legally insufficient, are not established by default"); Doe v. Qi, 349 F.Supp.2d 1258, 1272 (N.D. Cal. 2004) (" [Although] the factual allegations of [the] complaint together with other competent evidence submitted by the moving party are normally taken as true . . . this Court must still review the facts to insure that the Plaintiffs have properly stated claims for relief").
If the court determines that the allegations in the complaint are sufficient to establish liability, it must then determine the " amount and character" of the relief that should be awarded. 10A Wright, Miller, & Kane, supra, § 2688, at 63; Elektra Entertainment Group Inc. v. Crawford, 226 F.R.D. 388, 394 (C.D. Cal. 2005) (stating that the district court has " wide latitude" and discretion in determining the amount of damages to award upon default judgment, quoting James v. Frame, 6 F.3d 307, 310 (5th Cir. 1993)).
Plaintiffs have satisfied these requirements. Plaintiffs served the summons and complaint on Hernandez on November 5, 2014. When he failed to respond, the clerk entered Hernandez's default as to the complaint on January 2, 2015. Plaintiffs have filed a declaration indicating that Hernandez is not an infant, incompetent person or in the military service or otherwise exempted under the Soldiers' and Sailors' Civil Relief Act of 1940, the predecessor to the Servicemembers Civil Relief Act. In addition, although not required to do so under Rule 55(b)(2), plaintiffs served the motion for default judgment on Hernandez. Plaintiffs' motion seeks statutory damages, an injunction, and reasonable attorneys' fees -- the same forms of relief the prayer in the complaint sought. Plaintiffs have thus complied with the procedural prerequisites for entry of default judgment. See, e.g., PepsiCo, Inc., 238 F.Supp.2d at 1175 (finding that the procedural requirements of Rule 55 and Local Rule 55-1 had been met where plaintiffs addressed each required factor in their application for default judgment).
Proof of Service (" Proof of Service"), Docket No. 9 (Dec. 15, 2014).
Default by Clerk Entered (" Default"), Docket No. 11 (Jan. 2, 2015).
Declaration of Timothy Frank, Docket No. 13-5 (Jan 26, 2015), ¶ ¶ 3-5.
Proof of Service.
Motion at 15.
B. The Eitel Factors
Granting or denying a motion for default judgment is a matter within the court's discretion. Elektra Entertainment Group Inc. v. Bryant, No. CV 03-6381 GAF (JTLx), 2004 WL 783123, *1 (C.D. Cal. Feb. 13, 2004); see also Sony Music Entertainment Inc. v. Elias, No. CV 03-6387 DT (RCx), 2004 WL 141959, *3 (C.D. Cal. Jan. 20, 2004). The Ninth Circuit has directed that courts consider the following " Eitel factors" in deciding whether to enter default judgment: (1) the possibility of prejudice to plaintiffs, (2) the merits of plaintiffs' substantive claims, (3) the sufficiency of the complaint, (4) the sum of money at stake in the action; (5) the possibility of a dispute concerning the material facts; (6) whether defendant's default was the product of excusable neglect, and (7) the strong public policy favoring decisions on the merits. See Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986); see also Bryant, 2004 WL 783123 at *1-2.
1. Possibility of Prejudice to Plaintiffs
The first Eitel factor considers whether a plaintiff will suffer prejudice if a default judgment is not entered. PepsiCo, Inc., 238 F.Supp.2d at 1177; see also Eitel, 782 F.2d at 1471-72. Because Hernandez has not responded to the complaint or otherwise appeared, plaintiffs would be left without a remedy against him if default judgment were not entered. See PepsiCo, Inc., 238 F.Supp.2d at 1177 (stating that plaintiffs would have no other recourse if a default judgment were not entered). The first Eitel factor therefore weighs in favor of the entry of default judgment.
2. The Merits and Sufficiency of Plaintiffs' Complaint
The second and third Eitel factors assess the substantive merit of the movant's claim and the sufficiency of its pleadings. These factors " require that a plaintiff state a claim on which [it] may recover." PepsiCo, Inc., 238 F.Supp.2d at 1175; see also Discovery Communications, Inc. v. Animal Planet, Inc., 172 F.Supp.2d 1282, 1288 (C.D. Cal. 2001) (" The Ninth Circuit has suggested that the [ ] two Eitel factor[s] involving the substantive merits of Plaintiff's claims and the sufficiency of the complaint [ ] 'require that plaintiff's allegations state a claim on which [it] may recover, '" quoting Danning v. Lavine, 572 F.2d 1386, 1388 (9th Cir. 1978)). As mentioned, plaintiffs' complaint pleads claims for violation of the DMCA, FCA, and ECPA. Their motion for default judgement addresses only the ECPA claim. Because plaintiffs have stated a claim under this statute and can recover all of their requested relief based on Hernandez's violation of it, the court evaluates only the ECPA claim.
See Complaint, ¶ ¶ 29-41.
See Motion at 3, 15.
The ECPA prohibits any person from " intentionally intercept[ing], endeavor[ing] to intercept, or procur[ing] any person to intercept or endeavor to intercept[ ] any wire, oral, or electronic communication." 18 U.S.C. § 2511(1)(a). 18 U.S.C. § 2520 provides a private right of action for violation of the statute; it states that " any person whose wire, oral, or electronic communications is intercepted, disclosed, or intentionally used in violations of this chapter may in a civil action recover from the person . . . which engaged in that violation such relief as may be appropriate." 18 U.S.C. § 2520(a); see EchoStar Satellite, L.L.C. v. Viewtech, Inc., 543 F.Supp.2d 1201, 1208 (S.D. Cal. 2008) (" 18 U.S.C. § 2520 does provide a private cause of action for violation of § 2511(1)(a)"). The Ninth Circuit has held that satellite television signals are a form of electronic communication protected by the ECPA. See DIRECTV, Inc. v. Webb, 545 F.3d 837, 844 (9th Cir. 2008).
To state a claim under § 2520(a) for violation of § 2511, " the plaintiff must plead facts showing that the defendant intentionally intercepted the plaintiff's satellite television programming without proper authorization." See DISH Network, L.L.C. v. Gonzalez, No. 1:13-CV-00107-LJO-SKO, 2013 WL 2991040, *4 (E.D. Cal. June 14, 2013); DISH Network L.L.C. v. Sanchez, No. 1:11-CV-01485-AWI-SKO, 2012 WL 2090439, *4 (E.D. Cal. June 8, 2012).
Plaintiffs allege that because they broadcast copyrighted works, they have the authority to protect the works from unauthorized viewing and reception. They assert that Hernandez subscribed to a piracy service, NFPS, and obtained an unauthorized receiver with piracy software. NFPS business records purportedly reflect that Hernandez purchased three NFPS subscriptions over the course of several years; they also reflect that on December 2, 2011, he received three passwords to access NFPS. He also allegedly requested control words from its server in order to decrypt DISH Network satellite signals and view DISH programming without a subscription or other valid authorization. Hernandez's use of NFPS is also purportedly evidenced by comments he left -- as user " ftaxxx" -- on ftazeta.com, a website for forums that allegedly pertain to DISH Network piracy. On December 15, 2011, in a forum titled " Issues with NFPS service, " Hernandez posted in a thread labeled " Is nfps server down" that " [he was] down too, " and noted the server port number NFPS had assigned him when he subscribed -- 10410. On January 18, 2012, Hernandez visited tyhe same forum and posted, on a " Report DOWN/FREEZING HERE" thread, " down port 10410 ." Hernandez also purportedly expressed gratitude to another forum member for posting about two DISH Network movies that NFPS had promised to provide subscribers.
Complaint, ¶ 12.
Id., ¶ 27.
Id., ¶ 26. Hernandez allegedly purchased NFPS subscriptions on or about October 20, 2010, December 2, 2011, and February 18, 2013. (Id. )
Motion at 7-8.
Complaint, ¶ 27.
Motion at 8.
Id.
Id.
Id.
These allegations suffice to allege a violation of § 2511(1)(a). See Gonzalez, 2013 WL 2991040 at *1, 4 (concluding that plaintiff had stated a § 2520 claim based on violation of § 2511(1)(a) because it allege that defendant had an NFPS subscription, had access to an IKS server that gave him control words to view DISH Network programming without a subscription, and discussed his unauthorized reception of DISH Network satellite signals in an online forum); Sanchez, 2012 WL 2090439 at * 4 (" [T]he court determined that allegations that a consumer utilized a key sharing television service and server to obtain a satellite television provider's de-scrambling control words to illegally receive, intercept, and de-scramble providers copyrighted television programmer sufficiently alleged a claim under the ECPA, " citing Dish Network, L.L.C. v. Delvecchio, 831 F.Supp.2d 595, 2011 WL 4747848, at *3-4 (W.D.N.Y. 2011)).
The second and third Eitel factors therefore weigh in favor of entering default judgment against Hernandez.
3. The Sum of Money at Stake
The fourth Eitel factor balances " the amount of money at stake in relation to the seriousness of the [defaulting party's] conduct." PepsiCo, Inc., 238 F.Supp.2d at 1176; see also Eitel, 782 F.2d at 1471-72. Default judgment is disfavored where the sum of money at stake is too large or unreasonable in relation to defendant's conduct. See Truong Giang Corp. v. Twinstar Tea Corp., No. C 06-03594 JSW, 2007 WL 1545173, *12 (N.D. Cal. May 29, 2007) (citing Totten v. Hurrell, No. 00-2718, *2 (N.D. Cal. Nov. 28, 2001)).
Under § 2520, a party can recover the greater of " actual damages suffered by the plaintiff and any profits made by the violator as a result of the violation[, ]" or statutory damages in the amount of $100 per day for each day of violation or $10,000, whichever is greater. 18 U.S.C. § 2520(c)(2). Plaintiffs here seek $10,000 in statutory damages. This is within the range of statutory damages expressly authorized by Congress and is not too large or unreasonable given defendant's conduct. Thus, this factor does not weigh against the entry of default judgment.
Motion at 7.
4. The Possibility of Dispute
The fifth Eitel factor considers the possibility that material facts may be in dispute. PepsiCo., Inc., 238 F.Supp.2d at 1177; see also Eitel, 782 F.2d at 1471-72. Hernandez has failed to appear and has therefore admitted all material facts alleged in plaintiffs' complaint. See PepsiCo, Inc., 238 F.Supp.2d at 1177 (" Upon entry of default, all well-pleaded facts in the complaint are taken as true, except those relating to damages, " citing Televideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987)). Plaintiffs, moreover, have proffered evidence of Hernandez's posts on ftazeta.com, together with evidence that he made subscription payments (characterized as " donations") for NFPS services. As a result, there is little possibility that there is a dispute concerning the material facts. This factor, therefore, weighs in favor of granting plaintiffs' motion for default judgment.
Declaration of Steven Rogers, Docket No. 13-3 (Jan. 28. 2015), Exhs. 1-7.
5. Possibility of Excusable Neglect
The sixth Eitel factor considers whether a defendant's default may have been the product of excusable neglect. PepsiCo, Inc., 238 F.Supp.2d at 1177; see also Eitel, 782 F.2d at 1471-72. Here, there is no evidence that Hernandez's failure to appear and defend is the result of excusable neglect. Hernandez had adequate notice that he had been sued, because he was properly served with the complaint and summons, the application for the entry of his default, and this motion for entry of default judgment. See Shanghai Automation Instrument Co., Ltd. v. Kuei, 194 F.Supp.2d 995, 1005 (N.D. Cal. 2001) (finding no excusable neglect because defendants " were properly served with the Complaint, the notice of entry of default, as well as the papers in support of the instant motion"). From these facts, the court finds it reasonable to infer that Hernandez's default was not the product of excusable neglect. Accordingly, this factor also weighs in favor of the entry of default judgment.
See Proof of Service.
See Default.
See Proof of Service, Docket No. 13-8 (Jan. 28, 2015).
6. Policy of Deciding Cases on the Merits
" Cases should be decided upon their merits whenever reasonably possible." Eitel, 782 F.2d at 1472. The mere enactment of Rule 55(b) indicates, however, that " this preference, standing alone, is not dispositive." PepsiCo, Inc., 238 F.Supp.2d at 1177 (quoting Kloepping, 1996 WL 75314 at *3). Rule 55(a) allows a court to decide a case before the merits are heard if a defendant fails to appear and defend. See id. (" Defendant's failure to answer Plaintiffs' Complaint makes a decision on the merits impractical, if not impossible"). Since Hernandez has failed to respond to Plaintiffs' claims, the seventh Eitel factor does not preclude the entry of default judgment. Moreover, in aggregate, this factor is outweighed by the other applicable factors that favor entry of default judgment.
7. Conclusion Regarding the Eitel Factors
Other than the policy of deciding cases on the merits, all of the Eitel factors weigh in favor of the entry of default judgment. Consequently, the court finds it appropriate to grant plaintiffs' motion for default judgment against Hernandez.
C. The Character and Amount of Plaintiffs' Recovery
As noted, plaintiffs seek statutory damages, injunctive relief, attorneys' fees under the ECPA. Under Rule 8(a)(3), a plaintiff's demand for relief must be specific, and he " must 'prove up' the amount of damages." Philip Morris USA Inc. v. Banh, No. CV 03-4043 GAF (PJWx), 2005 WL 5758392, *6 (C.D. Cal. Jan. 14, 2005); Bryant, 2004 WL 783123 at *5 (" Plaintiffs must 'prove up' the amount of damages that they are claiming"). Rule 54(c) limits the relief that can be sought in a motion for entry of default judgment to that identified in the complaint. Fed.R.Civ.Proc. 54(c) (" A default judgment must not differ in kind from, or exceed in amount, what is demanded in the pleadings"). See also PepsiCo, Inc., 238 F.Supp.2d at 1174 (stating that a default judgment " shall not be different in kind from or exceed in amount that prayed for in the [complaint]"). Also as noted, defaulting defendants are not deemed to have admitted facts concerning damages alleged in the complaint. See id. at 1177 (" Upon entry of default, all well-pleaded facts in the complaint are taken as true, except those relating to damages, " citing Televideo Sys., 826 F.2d at 917-18).
Complaint, ¶ 8; Motion at 5-6.
1. Damages Under 18 U.S.C. § 2520(c)
Section 2520(a) provides that " any person whose wire, oral, or electronic communication is intercepted, disclosed, or intentionally used in violation of this chapter may in a civil action recover from the person or entity . . . which engaged in that violation such relief as may be appropriate." 18 U.S.C. § 2520(a). Section 2520(c) is divided into two parts. The first provides a damages remedy for a violation that involves " the private viewing of a private satellite video communication that is not scrambled or encrypted." 18 U.S.C. § 2520(c)(1). The second provides a damages remedy for " any other action under" the section. 18 U.S.C. § 2520(c)(2). Because plaintiffs allege a violation involving the interception of scrambled or encrypted electronic communications, the court can, under § 2520(c)(2), " assess as damages whichever is the greater of (A) the sum of the actual damages suffered by the plaintiff and any profits made by the violator as a result of the violation; or (B) statutory damages of whichever is the greater of $100 a day for each day of violation or $10,000." 18 U.S.C. § 2520(c)(2). The court has discretion under § 2520 whether to award damages. See DIRECTV, Inc. v. Brown, 371 F.3d 814, 818 (11th Cir. 2004) (" The use of the term 'may' is plain and means that an award of damages under section 2520(c)(2) is discretionary"); Dorris v. Absher, 179 F.3d 420, 430 (6th Cir. 1999) (" We find that the plain language of the statute compels the conclusion that the district courts have the discretion to decline the imposition of damages").
This discretion is limited in the sense that the court can either award the amount call for by the statute or decline to award any damages. " The [c]ourt may not, however, award an amount that falls between those two figures." Gonzalez, 2013 WL 2991040 at *5; Dish Network, LLC v. Rounds, No. 11-241-E, 2012 WL 1158798, *4 (W.D. Pa. Apr. 6, 2012) (" Although a court has the discretion whether to award statutory damages, once it decides to do so, it 'has no discretion as to the amount'"); DISH Network L.L.C. v. DelVecchio, 831 F.Supp.2d 595, 601 (W.D.N.Y. 2011) (" Congress wrote § 2520(c)(2) to give discretion to the Court in determining whether to award damages, but the plain language of the statute does not . . . authorize the Court to grant anything other than the damages permitted by the statute. . . . [T]he discretion provided to it allows it only to decide between no damages and $10,000"); DIRECTV, Inc. v. Walsh, 540 F.Supp.2d 553, 561 (M.D. Pa. 2008) (" The question then is whether to award no damages or $10,000"); DIRECTV, Inc. v. Huynh, 318 F.Supp.2d 1122, 1132 (M.D. Ala. 2004) (" The court has discretion whether to award damages at all, but the court, if it decides to award damages, has no discretion as to the amount"); DIRECTV, Inc. v. Hedger, 322 F.Supp.2d 879, 882 (W.D. Mich. 2004) (" under [§ 2520(c)(2)], the Court may exercise its discretion to either award DIRECTV $10,000 or to award no damages at all"); Directv, Inc. v. Griffin, 290 F.Supp.2d 1340, 1347-48 n. 28 (M.D. Fla. 2003) (" Although a district court has the discretion to award the full amount of statutory damages authorized under § 2520(c)(2) or none at all, Congress did not grant district courts authority to prescribe an amount falling between those two choices").
The Sixth Circuit has established a four factor framework for analyzing whether it is appropriate to award damages under § 2520(c): " (1) The court should first determine the amount of actual damages to the plaintiff plus the profits derived by the violator, if any; (2) The court should next ascertain the number of days that the statute was violated, and multiply by $100; (3) The court should then tentatively award the plaintiff the greater of the above two amounts, unless each is less than $10,000, in which case $10,000 is to be the presumed award; (4) Finally, the court should exercise its discretion to determine whether the plaintiff should receive any damages at all in the case before it." See Dorris, 179 F.3d at 430. District courts in the Ninth Circuit have followed the Sixth Circuit's framework and, in the absence of controlling Ninth Circuit precedent, the court finds the Sixth Circuit's approach reaonable and adopts it here. See Gonzalez, 2013 WL 2991040 at *6; Sanchez, 2012 WL 2090439 at *6-7.
a. Actual Damages and Profits Do Not Exceed $10,000
Plaintiffs do not seek actual damages. They assert that actual damages cannot be fully calculated because, due to Hernandez's failure to appear, they did not have an opportunity to conduct necessary discovery. They assert they are " not in a position to establish actual damages in excess of $10,000." See Gonzalez, 2013 WL 2991040 at *7 (awarding statutory damages where " [p]laintiffs d[id] not claim that their actual damages exceed[ed] $10,000"). The court agrees that there is insufficient evidence to conclude that actual damages exceed $10,000. Id. (citing DirecTV, Inc. v. Huynh, No. CV 04-3496 CRB, 2005 WL 5864467, *5 (N.D. Cal. May 31, 2005) (denying actual damages because they were insufficiently supported). Accordingly, the court proceeds to the next factor.
Motion at 7 n. 1.
Id.
b. Damages Per Day Do Not Exceed $10,000
Section 2520(c)(2)(B) calls for the calculation of damages of $100 for each day of violation. 18 U.S.C. § 2520 (c)(2)(B). The complaint alleges that Hernandez had access to NFPS for approximately three years; its allegations are insufficient, however, accurately to calculate the number of days Hernandez used the NFPS server to circumvent DISH Network security and obtain access to its programming. Gonzalez, 2013 WL 2991040 at *7 (" As discussed above, Plaintiffs have demonstrated that Defendant was in violation of the statute by purchasing an approximately two-year subscription to NFPS and IKS Rocket and then used an unauthorized server to access DISH Network. Plaintiffs claim the records are not complete and fail to show every occurrence of access by Defendant. Congress has provided only for a calculation of damages of '$100 a day for each day of violation' (emphasis added), however, it is unknown on how many days the violation occurred. The only available evidence is that the subscription covered approximately two years which is insufficient to determine the per-day damages." (emphasis in original)). The court therefore proceeds to the next factor.
Hernandez purchased subscriptions to NFPS on or about October 20, 2010, December 2, 2011, and February 18, 2013. (Complaint, ¶ 26.)
c. Presumed Damage Award Is $10,000
Under § 2520(c)(2), the court must select the greater of the per-day damages or $10,000. 18 U.S.C. § 2520 (c)(2). Where, as here, neither actual damages nor per-day damages are shown to be greater than $10,000, the " [c]ourt must presume a $10,000 award of damages." Gonzalez, 2013 WL 2991040 at *7 (citing Dorris, 179 F.3d at 430). Consequently, the presumed damages award is $10,000. Id.
d. Whether the Court Should Award Statutory Damages of $10,000
The final step in considering statutory damages under § 2520 is to decide whether to make a discretionary award of statutory damages. Brown, 371 F.3d at 818; Reynolds v. Spears, 93 F.3d 428, 435 (8th Cir. 1996); Nalley v. Nalley, 53 F.3d 649, 654 (4th Cir. 1995). In exercising discretion, courts typically consider the following factors identified by the Fourth Circuit:
" (1) the severity or minimal nature of the violation; (2) whether there was actual damage to the victim; (3) the extent of any intrusion into the victim's privacy; (4) the relative financial burdens of the parties; (5) whether there was a reasonable purpose for the violation; and (6) whether there is any useful purpose to be served by imposing the statutory damages amount." DIRECTV, Inc. v. Rawlins, 523 F.3d 318, 325-26 (4th Cir. 2008).
Some courts have found that awarding $10,000 is excessive in cases where there is a lack of evidence that the defendant profited from his unauthorized access to protected communications; the Rawlins court held, however, that whether a defendant " used the devices for commercial purposes [or] purchased them for resale is not germane to an analysis of damages related to [defendant's] patent violation of the statute." Rawlins, 523 F.3d at 327; see Gonzalez, 2013 WL 2991040 at *8 (applying the Rawlins factors and awarding $10,000 of damages in the context of a default judgment where defendant used an IKS server to gain unauthorized access to DISH Network programming).
Numerous district courts in California have awarded $10,000 in statutory damages when entering a default judgment, although not all have explicitly weighed the Rawlins factors. See, e.g., Gonzalez, 2013 WL 2991040 at *8-9 (awarding $10,000 statutory damages); Directv, Inc. v. Turnbough, No. 2:04-cv-2409-GEB-GGH, 2006 WL 4007549, *2 (E.D. Cal. Jan. 30, 2006) (same); Directv, Inc. v. Grosman, No. 03-04176 CW, 2005 WL 1230791, *2 (N.D. Cal. May 19, 2005) (same); Directv, Inc. v. Bowen, No. 2:04-cv-2407-GEB-GGB, 2005 WL 5155093, *2 (E.D. Cal. Dec. 8, 2005) (same).
(1) Nature and Extent of the Violation
The nature of Hernandez's violation is somewhat minimal, which weighs against imposing statutory damages. Compare Gonzalez, 2013 WL 2991040 at *8 (finding the use of an IKS server to obtain DISH Network programming over the course of two years minimal). Nonetheless, " [t]he full extent of [Hernandez's] access to the IKS server is unknown because of incomplete records"; thus, " [t]he fact that [p]laintiffs cannot prove the number of violations . . . does not weigh heavily against an imposition of statutory damages." Id. As the Rawlins court noted, a lack of evidence that precludes quantifying defendant's personal use of a device to decode signals should not weigh against an award of statutory damages where the paucity of evidence is attributable to defendant's default. Rawlins, 523 F.3d at 327 (" To the contrary, by providing district courts with the alternative of either actual or statutory damages, the Wiretap Act provides a vehicle for awarding damages that does not stall merely because the defendant has refused to participate in the process").
(2) Actual Damages and Financial Burden
Plaintiffs have demonstrated that they have been actually damaged albeit in an amount that cannot be determined. Evidence indicates that Hernandez purchased NFPS subscriptions in three different years to secure access to DISH Network programming, including pay-per-view and premium channels, without paying the subscription fees DISH Network charges. Gonzalez, 2013 WL 2991040 at *9 (finding actual damage where defendant purchased NFPS or IKS Rocket so as " presumably to avoid paying higher subscription fees as a legitimate subscriber of DISH Network programming"); Sanchez, 2012 WL 2090439 at *10 (holding that repeatedly purchasing subscriptions to avoid paying DISH Network subscriber fees " sufficiently demonstrated that [plaintiffs] suffered actual damages from [d]efendant's actions through the loss of a legitimate subscriber"). Plaintiffs lost subscriber fees and equipment sales for the length of time that Hernandez decrypted the DISH Network signals; they were also forced to make frequent security updates as a result of piracy like Hernandez's. This factor, therefore, weighs in favor of awarding statutory damages.
(3) Legitimate Purpose for the Violation
The fact that there was no legitimate reason for Hernandez's actions also weighs in favor of imposing statutory damages. Plaintiffs' evidence and allegations show that Hernandez's subscribed to NFPS for approximately three years. Hernandez, moreover, " has demonstrated an unwillingness to respond to the complaint or seek to set aside the entry of default against him. In sum, there is no basis for the [c]ourt to conclude that [p]laintiffs' well-pled allegations should no be taken as true. If the allegations are deemed to be true, there can be no legitimate reason for [Hernadnez's] actions." Gonzalez, 2013 WL 2991040 at *9; Rounds, 2012 WL 1158798 at *3 (" Here, the Complaint avers that Defendant, through a subscription, utilized the pirate access device on numerous occasions. There could be no legitimate reason for Defendant's actions").
(4) Whether Statutory Damages Would Serve a Useful Purpose
Awarding statutory damages in this case would serve an important and useful purpose. In this regard, the court must seriously consider the " adverse effects of allowing the misconduct to go unsanctioned, " as it would effectively serve as an incentive to commit this type of piracy. See Gonzalez, 2013 WL 2991040 at *10 (" Awarding plaintiffs no damages would effectively reward Defendant for wrongful actions"); Sanchez, 2012 WL 2090439 at *11 (citing Rawlins, 523 F.3d at 326-27 (failing to consider the adverse effects of declining to award statutory damages could be an abuse of discretion)). " Here, a refusal to award statutory damages incentivizes, rather than deters, [Hernandez] and others from similar acts of piracy. Thus, even if the actual damages to [p]laintiffs in this case are somewhat de minimis, that factor is outweighed by the deterrent purpose that the statute serves in this matter." Gonzalez, 2013 WL 2991040 at *10. This factor therefore weighs in favor of granting statutory damages.
e. Conclusion as to Statutory Damages
For the reasons stated, the court finds it appropriate to award $10,000 in statutory damages under 18 U.S.C. § 2520(c)(2)(B). This amount is adequate to hold Hernandez accountable for his misconduct and to deter future violations.
2. Permanent Injunctive Relief
Plaintiffs also seek permanent injunctive relief; the ECPA specifically authorizes " such preliminary and other equitable or declaratory relief as may be appropriate." 18 U.S.C. § 2520(b)(1). Plaintiffs assert that the type of piracy in which Hernandez engaged " undermine[s] the investment in [their proprietary] technology and result[s] in the need for costly updates." They contend that it injures each of their reputations and goodwill, and has a negative impact on their revenue. Plaintiffs ask that the court enjoin Hernandez from " circumventing or assisting others to circumvent DISH Network's security system, or otherwise intercepting or assisting others to intercept DISH Network's satellite signal." They also ask that the court restrain Hernandez from " testing, analyzing, reverse engineering, manipulating, or otherwise extracting codes, data, or information from DISH Network's [equipment and technology]."
Motion at 11-13.
Id. at 15.
" According to well-established principles of equity, a plaintiff seeking a permanent injunction must satisfy a four-factor test before a court may grant such relief. A plaintiff must demonstrate: (1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction." eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391, 126 S.Ct. 1837, 164 L.Ed.2d 641 (2006); Reno Air Racing Ass'n., Inc. v. McCord, 452 F.3d 1126, 1138 n. 11 (9th Cir. 2006). " [T]he decision whether to grant or deny injunctive relief rests within the equitable discretion of the district courts." eBay, 547 U.S. at 394. Any " injunction must be narrowly tailored . . . to remedy only the specific harms shown by the plaintiffs rather than to enjoin all possible breaches of the law." Iconix, Inc. v. Tokuda, 457 F.Supp.2d 969, 998 (N.D. Cal. 2006) (quoting Price v. City of Stockton, 390 F.3d 1105, 1117 (9th Cir. 2004)).
Granting permanent injunctive relief is appropriate in this case. Plaintiffs have suffered irreparable injury due to Hernandez's piracy, which has deprived them of revenue they would otherwise have received, and damaged their reputations and goodwill. See Gonzalez, 2013 WL 2991040 at *10 (stating that the " revenue diverted from Plaintiffs" through television programming piracy caused irreparable injury); Sanchez, 2012 WL 2090439 at *12 (reasoning that piracy of television programming irreparably harmed plaintiffs). Absent an injunction, moreover, it appears that Hernandez will simply continue his conduct, as monetary damages may be uncollectible and thus will not prevent future piracy. Sanchez, 2012 WL 2090439 at *12 (finding remedies at law inadequate where damages without injunctive relief would be insufficient to prevent future piracy).
The balance of hardships also weighs in favor of granting injunctive relief, as a permanent injunction would do no more than require Hernandez to cease his illegal activity and comply with the anti-piracy law. This is not a cognizable form of hardship. CoxCom, Inc. v. Chaffee, 536 F.3d 101, 112 (1st Cir. 2008) (noting that an injunction would do nothing more than require defendant to comply with federal and state anti-piracy laws). The public interest too would be served in that an injunction would protect copyrights and aid in the enforcement of federal law. Id. (" the public has an interest in the enforcement of . . . statutes"); Gonzalez, 2013 WL 2991040 at *10 (same).
In sum, the eBay factors weigh in favor of granting injunctive relief. The court will therefore grant a permanent injunction enjoining Hernandez from circumventing or assisting others in circumventing plaintiffs' security system or intercepting or assisting others in intercepting plaintiffs' satellite signal, and from testing, analyzing, reverse engineering, manipulating, or otherwise extracting codes, data, or information from DISH Network's equipment and technology.
3. Attorneys' Fees
Local Rule 55-3 provides that " [w]hen a promissory note, contract or applicable statute provides for the recovery of reasonable attorneys' fees, " those fees shall be calculated according to a schedule set forth in the rule. Ca CD L.R. 55-3. The ECPA authorizes the award of " a reasonable attorney's fee and other litigation costs reasonably incurred." 18 U.S.C. § 2520(b)(3). Plaintiffs seek attorneys' fees under Local Rule 55-3's fee schedule. Under that rule, reasonable attorneys' fees for $10,000 default judgment are $1,300. The court therefore awards plaintiffs attorneys' fees of $1,300 under Local Rule 55-3.
The schedule expressly states that a person seeking a judgment ranging from $1,000.01 to $10,000.00 may be awarded attorneys' fee in the amount $300 plus 10% of the amount over $1,000. Here, plaintiffs are seeking $10,000 in statutory damages; thus, 10% of $10,000 is $1,000, which, with the initial $300, brings the total to $1,300.
III. CONCLUSION
For the reasons stated, the court grants pPlaintiffs' motion for default judgment. The court will enter judgment in plaintiffs' favor for $10,000 in statutory damages and $1,300 in attorneys' fees. The court will also enter a permanent injunction against Hernandez enjoining him from circumventing or assisting others in circumventing plaintiffs' security system, and intercepting or assisting others in intercepting plaintiffs' satellite signal. It will further enjoin him from testing, analyzing, reverse engineering, manipulating, or otherwise extracting codes, data, or information from DISH Network's equipment and technology.
JUDGMENT FOR PLAINTIFFS
On May 26, 2015, the court entered an order granting plaintiffs DISH Network LLC, Echostar Technologies LLC, and Nagrastar LLC's motion for entry of default judgment against defendant Jose Hernandez. Consequently, IT IS ORDERED AND ADJUDGED
1. That plaintiffs recover $10,000 in statutory damages under the Electronic Communications Privacy Act from Hernandez;
2. That plaintiffs recover $1,300 in attorneys' fees from Hernandez;
3. That Hernandez is enjoined from circumventing or assisting others in circumventing plaintiffs' security system, and intercepting or assisting others in intercepting plaintiffs' satellite signal. It will further enjoin him from testing, analyzing, reverse engineering, manipulating, or otherwise extracting codes, data, or information from DISH Network LLC's equipment and technology; and
4. That the action be, and is hereby, dismissed.