Opinion
Civil Action 20 Civ. 6460 (JPC) (SLC)
07-23-2021
JOE HAND PROMOTIONS, INC., Plaintiff, v. DELVIS BATISTA, individually and as an officer, director, shareholder, member and/or principal of Hudson Heights Bar & Grill Corp. d/b/a Bar 180, and HUDSON HEIGHTS BAR & GRILL CORP. d/b/a Bar 180, Defendants.
REPORT AND RECOMMENDATION
SARAH L. CAVE, United States Magistrate Judge.
TO THE HONORABLE JOHN P. CRONAN, United States District Judge:
I. INTRODUCTION
Plaintiff Joe Hand Promotions, Inc. (“JHP”), a closed-circuit distributor of sports and entertainment programming, asserts cable piracy, satellite piracy, and copyright claims against Defendants Delvis Batista (“Batista”) and Hudson Heights Bar & Grill Corp. d/b/a Bar 180 (“Bar 180”, together with Batista, “Defendants”) arising out of Defendants' unauthorized broadcast of the August 26, 2017 boxing match between Floyd Mayweather Jr. and Conor McGregor (the “Event”), as to which JHP held the exclusive distribution rights. (ECF Nos. 1; 21-3). After Defendants failed to appear and defend in this action, the Clerk of Court entered Certificates of Default against them (ECF Nos. 17-18). JHP moved for default judgment (ECF No. 21 (the “Motion”)). The Honorable John P. Cronan, following a hearing at which Defendants did not appear, agreed to enter default judgment, and referred the Motion to me to conduct an inquest and issue a Report and Recommendation concerning damages. (ECF Nos. 26; 30 at 11).
For the reasons set forth below, I respectfully recommend that JHP be awarded statutory damages in the amount of $6,700.00, enhanced damages in the amount of $20,100.00, attorneys' fees in the amount of $930.00, and costs in the amount of $545.00.
II. BACKGROUND
A. Factual Background
Unless otherwise noted, the factual background is drawn from JHP's allegations in its Complaint, which are accepted as true for the liability portion of this Report and Recommendation. Where noted, additional facts are drawn from documents JHP submitted in support of the Motion, including the affidavit of Joe Hand, Jr. (“Hand Affidavit”) (ECF No. 21-2), the affidavit of Leoncite Celestin (ECF No. 21-5), and the declarations of JHP's counsel, Jon D. Jekielek, Esq. (the “Jekielek Declaration” and the “Second Jekielek Declaration) (ECF Nos. 21-6; 33), and accompanying exhibits.
JHP is a Pennsylvania corporation with its principal place of business in Feasterville, Pennsylvania. (ECF No. 1 ¶ 3). Joe Hand, Jr. (“Hand”) is JHP's President. (ECF No. 21-2 ¶ 1). JHP “specializes in distributing and licensing premier sporting events to commercial/non-residential establishments including bars, restaurants, clubhouses, shops, and similar locations.” (ECF No. 1 ¶ 4; see ECF No. 21-2 ¶ 3).
In response to an “erosion in the sales of” its proprietary programming following the advent of Pay-Per-View programming, JHP “embarked upon a nationwide program to police [its] signals” to identify and prosecute commercial establishments that pirated JHP's closed-circuit programs. (ECF No. 21-2 ¶¶ 4-5). Hand states that “the unchecked activity of signal piracy” has cost JHP several million dollars in lost revenue. (ECF No. 21-2 ¶ 18). As part of its policing, JHP has retained “auditors and law enforcement personnel to detect and identify signal pirates.” (Id. ¶ 6). In addition, “cable and satellite television providers scramble, restrict and/or block commercial customer accounts and equipment from ordering or receiving Pay-Per-View programs.” (Id. ¶ 8). A commercial establishment seeking to present a Pay-Per-View program must pay the requisite commercial fee to JHP, which then notifies the establishment's cable or satellite provider to “unscramble” the program. (Id. ¶ 9).
Pursuant to a commercial licensing agreement with the owner of the copyright of the Event, JHP “purchased and retained the commercial exhibition rights to” commercially distribute the audiovisual presentation of the Event. (ECF No. 21-2 ¶ 3; see ECF No. 1 ¶ 6). JHP required domestic commercial establishments to pay commercial sublicense fees, based on their maximum occupancy, to broadcast the Event. (ECF No. 21-2 ¶ 7). Hand represents that JHP's “programming is not and cannot be mistakenly, innocently, or accidentally intercepted.” (ECF No. 21-2 ¶ 16). For a commercial establishment with a maximum fire code occupancy of 150- 200 persons, the sublicense fee for the Event would have been $6,700. (Id. ¶ 7; ECF No. 21-4).
Defendants “are the owners and/or operators of Bar 180, a commercial establishment located at 4241 Broadway, New York, NY 10033[.]” (ECF No. 21-2 ¶ 10). Batista is the sole owner of Bar 180. (ECF No. 30 at 9-10). On August 26, 2017, as part of the policing program described above, one of JHP's auditors, Leoncite Celestin, entered Bar 180 after paying a $25 cover charge. (ECF No. 21-2 ¶ 14; ECF No. 21-5 at 1). Celestin ordered a Corona, and observed one of the undercard bouts that was part of the Event being broadcast on three televisions. (ECF No. 21-5 at 1). Celestin estimated that Bar 180 had a capacity of approximately 200 patrons, although only 40-45 patrons were present at the time. (Id.)
Defendants did not pay a commercial fee to JHP to receive the Event legally through Bar 180's cable or satellite provider, and JPH did not authorize Bar 180's cable or satellite provider to allow Bar 180 to receive and broadcast the Event, nor did JHP otherwise authorize Bar 180 to exhibit the Event. (ECF No. 21-2 ¶¶ 11-13). Yet, in a Facebook post, Bar 180 advertised that it would broadcast the Event, with a $25 cover charge and sponsorship from “Chivas Regal Promotions.” (Id. ¶ 15; ECF No. 21-9 at 2). This was the second time Defendants advertised their broadcast of one of JHP's programs without authorization, the first being the July 29, 2017 “Ultimate Fighting Championship® 214: Cormier v. Jones 2, ” to which JHP “held the exclusive commercial distribution rights.” (ECF Nos. 21-6 ¶ 6; 21-9 at 3).
After the Event, JHP's counsel sent multiple letters to Defendants seeking to discuss a potential settlement. (ECF No. 30 at 4). JHP's counsel spoke with a woman who held herself out as Defendants' accountant, and, after some “back and forth” correspondence, sent the woman a proposed settlement agreement, but only “radio silence” from her followed. (Id. at 4-5).
B. Procedural Background
On August 14, 2020, JHP filed the Complaint. (ECF No. 1). JHP asserted two claims: (1) satellite and cable piracy in violation of 47 U.S.C. § 605 and § 553, respectively; and (2) copyright infringement in violation of 17 U.S.C. §§ 106 and 501. (Id. ¶¶ 18-25). In the Complaint, JHP sought statutory damages, attorneys' fees, costs, and interest. (Id. at 6).
On September 26, 2020, JHP served the Summons and Complaint on Defendants by in-person delivery to Bar 180. (ECF Nos. 11; 30 at 8). In addition, on September 29, 2020, JHP mailed a package containing the Summons and Complaint to Defendants at the address of Bar 180. (ECF Nos. 21-6 ¶ 8; 30 at 8). Accordingly, under Fed.R.Civ.P. 15(a)(1)(A)(i), Defendants' deadline to answer, move, or otherwise respond to the Complaint was October 19, 2020. (ECF Nos. 11; 30 at 8).
On November 12, 2020, JHP requested Certificates of Default against Defendants. (ECF Nos. 13; 14; 21-6 ¶ 9). The same day, the Clerk of Court issued Certificates of Default against both Defendants. (ECF Nos. 17; 18; 21-6 ¶ 10). On November 16, 2020, Judge Cronan ordered JHP to file its motion for a default judgment by November 30, 2020. (ECF No. 20).
On November 30, 2020, JHP filed the Motion. (ECF No. 21). On December 14, 2020, Judge Cronan ordered Defendants to respond to the Motion by January 4, 2021, ordered JHP to serve via overnight courier a copy of his Order and the Motion on Defendants and to file proof of service, and scheduled a hearing on the Motion for January 12, 2021 (the “Hearing”). (ECF No. 22 (the “12/14/20 Order”)). JHP served by Federal Express the 12/14/20 Order and the Motion on Defendants at the home address of Batista, who signed for the delivery. (ECF Nos. 23; 30 at 9). Defendants did not file any response to the Motion. (ECF No. 30 at 10).
On January 12, 2021, Judge Cronan held the Hearing telephonically. (ECF Nos. 24; 30). JHP's counsel appeared, but neither Defendants nor any representative appeared. (ECF No. 30 at 10). At the conclusion of the Hearing, Judge Cronan found that both Defendants had notice of the filing of the Complaint and the Hearing, “accept[ed] as true the well-pleaded allegations in the [C]omplaint, ” which he deemed “sufficient, ” and “enter[ed] a default judgment as to both [D]efendants on all claims in the [C]omplaint.” (Id. at 10-11). Judge Cronan referred the Motion for an inquest on damages. (Id. at 11; ECF No. 26).
On January 13, 2021, the Court issued an order requiring JHP to submit proposed findings of fact and conclusions of law concerning damages by February 19, 2021, and Defendants to submit their response by February 26, 2021. (ECF No. 27 (the “1/13/21 Order”)). In the 1/13/21 Order, the Court warned Defendants that their failure to respond to the Motion or contact the Court to request an in-court hearing would result in the issuance of a Report and Recommendation based on JHP's submissions alone without an in-court hearing. (Id.)
On February 19, 2021, JHP submitted its Proposed Findings of Fact and Conclusions of Law Concerning Damages. (ECF No. 28 (the “Damages Submission”)). In the Damages Submission, JHP seeks statutory damages of $6,700, enhanced damages of $20,100, attorneys' fees of $1,240.00, and costs of $545.00. (Id. ¶¶ 14-15, 20-21; ECF No. 28-1). JHP filed proof of service of the Damages Submission on Defendants. (ECF No. 29). With the Court's permission, on July 20, 2021, JHP filed the Second Jekielek Declaration in support of its request for attorneys' fees. (ECF Nos. 32; 33).
III. LEGAL STANDARD
A party seeking a default judgment must follow the two-step procedure set forth in Federal Rule of Civil Procedure 55. See Bricklayers & Allied Craftworkers Loc. 2 v. Moulton Masonry & Constr., LLC, 779 F.3d 182, 186-87 (2d Cir. 2015). First, under Rule 55(a), where a party has failed to plead or otherwise defend in an action, the Clerk of the Court must enter a certificate of default. Fed.R.Civ.P. 55(a). Second, after entry of the default, if the party still fails to appear or move to set aside the default, the Court may enter a default judgment. Fed.R.Civ.P. 55(b). Whether to enter a default judgment lies in the “sound discretion” of the trial court. Enron Oil Corp. v. Diakuhara, 10 F.3d 90, 95 (2d Cir. 1993). Because a default judgment is an “extreme sanction” that courts are to use as a tool of last resort, Meehan v. Snow, 652 F.2d 274, 277 (2d Cir. 1981), the district court must “carefully balance the concern of expeditiously adjudicating cases, on the one hand, against the responsibility of giving litigants a chance to be heard, on the other.” Fermin v. Las Delicias Peruanas Rest., Inc., 93 F.Supp.3d 19, 29 (E.D.N.Y. Mar. 19, 2015) (citing Enron, 10 F.3d at 96). In considering whether to grant a default judgment, district courts are “guided by the same factors [that] apply to a motion to set aside entry of a default.” First Mercury Ins. Co. v. Schnabel Roofing of Long Is., Inc., No. 10 Civ. 4398 (JS) (AKT), 2011 WL 883757, at *1 (E.D.N.Y. Mar. 11, 2011). “These factors include: (1) whether the default was willful; (2) whether ignoring the default would prejudice the opposing party; and (3) whether the defaulting party has presented a meritorious defense.” J & J Sports Prods. Inc. v. 1400 Forest Ave. Rest. Corp., No. 13 Civ. 4299 (FB) (VMS), 2014 WL 4467774, at *4 (E.D.N.Y. Sept. 10, 2014) (citing Swarna v. Al-awadi, 622 F.3d 123, 142 (2d Cir. 2010)).
A defendant's default is deemed “a concession of all well-pleaded allegations of liability, ” Rovio Ent., Ltd. v. Allstar Vending, Inc., 97 F.Supp.3d 536, 545 (S.D.N.Y. 2015), but a default “only establishes a defendant's liability if those allegations are sufficient to state a cause of action against the defendants.” Gesualdi v. Quadrozzi Equip. Leasing Corp., 629 Fed.Appx. 111, 113 (2d Cir. 2015). The Court must determine “whether the allegations in the complaint establish the defendants' liability as a matter of law.” Id. If, however, the complaint fails to state a claim on which relief may be granted, the court may not award damages, “even if the post-default inquest submissions supply the missing information.” Perez v. 50 Food Corp., No. 17 Civ. 7837 (AT) (BCM), 2019 WL 7403983, at *4 (S.D.N.Y. Dec. 4, 2019).
Once liability has been established, a court must “‘conduct an inquiry in order to ascertain the amount of damages with reasonable certainty.'” Am. Jewish Comm. v. Berman, No. 15 Civ. 5983 (LAK) (JLC), 2016 WL 3365313, at *3 (S.D.N.Y. June 15, 2016), adopted by, 2016 WL 4532201 (S.D.N.Y. Aug. 29, 2016) (quoting Credit Lyonnais Sec. (USA), Inc. v. Alcantara, 183 F.3d 151, 155 (2d Cir. 1999)). A plaintiff “bears the burden of establishing [its] entitlement to recovery and thus must substantiate [its] claim with evidence to prove the extent of damages.” Dunn v. Advanced Credit Recovery Inc., No. 11 Civ. 4023 (PAE) (JLC), 2012 WL 676350, at *2 (S.D.N.Y. Mar. 1, 2012). The evidence the plaintiffs submit must be admissible. Poulos v. City of New York, No. 14 Civ. 3023 (LTS) (BCM), 2018 WL 3750508, at *2 (S.D.N.Y. July 13, 2018), adopted by, 2018 WL 3745661 (S.D.N.Y. Aug. 6, 2018); see House v. Kent Worldwide Mach. Works, Inc., 359 Fed.Appx. 206, 207 (2d Cir. 2010) (summary order) (“damages must be based on admissible evidence”). If the documents the plaintiff has submitted provide a “sufficient basis from which to evaluate the fairness of” the requested damages, the court need not conduct an evidentiary hearing. Fustock v. ContiCommodity Servs. Inc., 873 F.2d 38, 40 (2d Cir. 1989); see Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 111 (2d Cir. 1997) (explaining that court may determine appropriate damages based on affidavits and documentary evidence “as long as [the court has] ensured that there [is] a basis for the damages specified in the default judgment”) (citation omitted).
IV. DISCUSSION
A. Default Judgment
As noted above, before entering a default judgment, the Court must consider “(1) whether the default was willful; (2) whether ignoring the default would prejudice the opposing party; and (3) whether the defaulting party has presented a meritorious defense.” 1400 Forest Ave., 2014 WL 4467774, at *4; see Mason Tenders Dist. Council v. Duce Constr. Corp., No. 02 Civ. 9044 (LTS) (GWG), 2003 WL 1960584, at *2 (S.D.N.Y. Apr. 25, 2003) (listing three factors).
Here, each factor supports entry of default judgment. First, Defendants' failure to respond to the Complaint is itself “sufficient to demonstrate willfulness.” 1400 Forest Ave., 2014 WL 4467774, at *4 (collecting cases). Defendants had notice of JHP's claims before they were filed, (ECF No. 30 at 4-5), and, as Judge Cronan has found, had notice of the filing of the Complaint and the Motion. (Id. at 10-11). Defendants neither answered, nor responded to the Complaint or the Motion, nor requested any extensions of time to do so. Defendants' failure to respond establishes willfulness. See Bridge Oil Ltd. v. Emerald Reefer Lines, LLC, No. 06 Civ. 14226 (RLC) (RLE), 2008 WL 5560868, at *2 (S.D.N.Y. Oct. 27, 2008) (“Since Defendants have been entirely unresponsive, their continued failure is willful.”). Second, Defendants' failure to respond in the face of JHP's efforts to prosecute its claims demonstrate that failing to grant the Motion would prejudice JHP, “as there are no additional steps available to secure relief in this Court.” Id. Third, Defendants, having failed to file an answer, cannot establish a meritorious defense. See id.
Because all three factors have been satisfied, entry of default judgment is warranted.
B. Liability
Because their default equates to Defendants' concession of “all well-pleaded factual allegations of liability in the [C]omplaint, ” the question becomes whether JHP's allegations, accepted as true, establish liability for their claims. 1400 Forest Ave., 2014 WL 4467774, at *5; see Cement & Concrete Workers Dist. Council Welfare Fund v. Metro Found. Contractors, Inc., 699 F.3d 230, 234 (2d Cir. 2012) (explaining that “a party's default is deemed to constitute a concession of all well-pleaded allegations of liability, ” but not “an admission of damages”) (quoting Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992)). JHP has the burden of establishing its entitlement to recovery. See J & J Sports Prods., Inc. v. Ventura, No. 18 Civ. 2972 (VB) (LMS), 2019 WL 2451632, at *4 (S.D.N.Y. Jan. 30, 2019) (“‘On a motion for default judgment, the burden is on the plaintiff to establish an entitlement to recovery and a failure to plead sufficient facts may require the denial of the motion.'”) (quoting J & J Sports Prods. v. Paucar, No. 17 Civ. 5358 (RJD) (VMS), 2018 WL 4501057, at *4 (E.D.N.Y. July 16, 2018)). In determining liability, the Court considers only the allegations in the Complaint, and not any additional information in JHP's post-default submissions. See Perez v. 50 Food Corp., 2019 WL 7403983, at *4.
JHP seeks to hold Defendants liable under sections 553 and 605 of the Federal Communications Act, 47 U.S.C. § 151 et seq. (the “FCA”). (ECF Nos. 21-1 at 8-19; 30 at 7).“Whereas section 605 applies to the theft of a radio communication whether or not the radio communication is thereafter sent out over a cable network, section 553 applies to communication thefts from a cable network, whether or not the communication originated as a radio communication.” J & J Sports Prods., Inc. v. La Ruleta, Inc., No. 11 Civ. 4422 (NGG) (VVP), 2012 WL 3764062, at *2 (E.D.N.Y. Aug. 7, 2012) (citing Int'l Cablevision, Inc. v. Sykes, 75 F.3d 123, 132-33 (2d Cir. 1996)), adopted by 2012 WL 3764515 (E.D.N.Y. Aug. 29, 2012).
Although it also asserted a claim under sections 106 and 501 of the Copyright Act, 17 U.S.C. § 101 et seq. (ECF No. 1 ¶¶ 22-25), JHP “now moves solely for an award of damages under the [FCA].” (ECF No. 21-1 at 8 n.1). Accordingly, the Court deems JHP to have expressly abandoned its copyright claims. See Vlad-Berindan v. N.Y.C. Metro. Trans. Auth., 779 Fed.Appx. 774, 776 n.1 (2d Cir. 2019) (declining to address “expressly abandoned” claims).
“[W]hen a defendant's conduct has violated both sections 553 and 605, an aggrieved cable operator is entitled to only one, non-duplicative recovery.” J & J Sports Prods., Inc. v. Chulitas Enter. Corp., No. 12 Civ. 3177 (JS) (WDW), 2014 WL 917262, at *3 (E.D.N.Y. Mar. 10, 2014) (quoting J & J Sports Prods., Inc. v. Alvarez, No. 07 Civ. 8852 (RPP) (HBP), 2009 WL 3096074, at *4 (S.D.N.Y. Sept. 25, 2009) (internal quotation omitted)). If a defendant violated both statutes, “the court should award damages pursuant to [s]ection 605.” Innovative Sports Mktg., Inc. v. Aquarius Fuente De Soda, No. 07 Civ. 2561 (ENV) (CLP), 2009 WL 3173968, at *5 (E.D.N.Y. Sept. 30, 2009). Here, JHP has elected to seek damages under section 605, (ECF No. 21-2 at 8 n.1, 9), and therefore, the Court need evaluate Defendants' liability under that provision only. See J & J Sports Prods., Inc. v. Fantasy Bar & Rest. Corp., No. 17 Civ. 5355 (JGK) (DF), 2018 WL 5018065, at *3 (S.D.N.Y. Sept. 20, 2018) (where plaintiff specified that it sought relief under section 605, analyzing motion for default judgment under that section only), adopted by, 2018 WL 5016606 (S.D.N.Y. Oct. 15, 2018); 1400 Forest Ave., 2014 WL 4467774, at *5 (evaluating liability and damages under section 605 only).
Section 605 of the FCA provides, as is relevant here, that “[n]o person not being authorized by the sender shall intercept any radio communication and divulge or publish the existence, contents, substance, purport, effect, or meaning of such intercepted communication to any person.” 47 U.S.C. § 605(a). The Second Circuit has held that section 605(a) is applicable to theft of cable communications that originated as a radio or satellite communication. See Cmty. Television Sys. Inc. v. Caruso, 284 F.3d 430, 435 (2d Cir. 2002) (explaining that section 605 applies “as long as the head end of the cable system at issue receives at least some radio transmissions”); Sykes, 75 F.3d at 133 (noting that section 605 “not only prohibits unauthorized interception of traditional radio communications, but also communications transmitted by means of new technologies”).
1. Bar 180's liability
The Court finds that JHP's well-pleaded allegations establish that Bar 180 violated section 605 of the FCA. JHP held exclusive rights to distribute the Event, which JHP did broadcast through “restricted online access” to those who paid “the proper commercial license fees to” JHP. (ECF No. 1 ¶ 13; see Id. ¶¶ 5-6, 10-12, 17). Bar 180 “did not have license, authorization, permission, or consent from” JHP to display the Event. (Id. ¶ 16). Instead, Bar 180 “exploited restricted online access” to the Event “to avoid paying the proper commercial license fees to” JHP. (Id. ¶ 13). Despite “clear language limiting use of an online stream” of the Event “to residential, personal, and/or non-commercial use only, ” commercial establishments like Bar 180 purchased the event “for viewing on a personal device or in a residence, then proceed to link this devise to the establishment's television screen(s) to unlawfully exhibit the [Event] commercially.” (Id.) Although JHP has not alleged “the precise method” by which Bar 180 obtained unauthorized access to the Event, 1400 Forest Ave., 2014 WL 4467774, at *6, it is sufficient, for purposes of establishing a violation of section 605, that JHP has alleged “that electronic decoding equipment and satellite coordinates were necessary to receive the signal for the [E]vent.” Chulitas Enter., 2014 WL 917262, at *3; see J & J Sports Prods., Inc. v. Onyx Dreams Inc., No. 12 Civ. 5355 (SLT) (LB), 2013 WL 6192546, at *3 (E.D.N.Y. Nov. 26, 2013) (explaining that “section 605 applies to the theft of a radio communication whether or not the radio communication is thereafter sent out over a cable network”).
Accordingly, given Bar 180's default, and the Court's obligation to accept JHP's well-pleaded allegations as true, JHP has adequately demonstrated that Bar 180 is liable under section 605.
2. Batista's liability
JHP also seeks to hold Batista liable as the owner and operator of Bar 180. (ECF No. 1 ¶ 8). To hold an individual liable under section 605(a), a plaintiff must show either “contributory infringement”-when an individual “authorize[d] the violations”-or “vicarious liability”-when the individual “had a right and ability to supervise the infringing activities and had an obvious and direct financial interest in the exploitation of [the] copyrighted materials.” J & J Sports Prods. v. Tellez, No. 11 Civ. 2823 (SMG), 2011 WL 6371521, at *3 (E.D.N.Y. Dec. 20, 2011) (citation omitted).
JHP alleges that Batista, on the date of the Event, “was an officer, director, shareholder, member or principal of the entity owning and operating” Bar 180, and “had the right and ability to supervise and an obvious and direct financial interest” in Bar 180's activities. (ECF No. 1 ¶¶ 8, 9). JHP also alleges that he “intentionally pirated the [Event] for the sole purpose of [his] own economic gain.” (Id. ¶ 15). As the sole owner of Bar 180, Batista had both “supervisory control” over it and “a direct financial interest in its showing of the Event.” 1400 Forest Ave., 2014 WL 4467774, at *6. These allegations are sufficient to establish Batista's individual liability under section 605(a). See Id. (finding allegations that individual defendant was “the officer, director, shareholder, and principal” with “supervisory control” over the establishment and a “direct financial interest” in the showing of the event were sufficient to establish individual liability under section 605); J & J Sports Prods., Inc. v. Mangos Steakhouse & Bakery, Inc., No. 13 Civ. 5068 (RJD), 2014 WL 2879868, at *5 (E.D.N.Y. May 7, 2014) (same), adopted by, 2014 WL 2879890 (E.D.N.Y. June 24, 2014).
Accordingly, JHP's allegations are sufficient to establish Batista's liability under section 605(a).
C. Damages
“Where liability is found under [s]ection 605(a) of the [FCA], a plaintiff may elect to recover either actual damages under [s]ection 605(e)(3)(C)(i)(I), or statutory damages under [s]ection 605(e)(3)(C)(i)(II).” Fantasy Bar & Rest., 2018 WL 5018065, at *3. Here, JHP discusses, in addition to the revenue it lost because Defendants did not pay the sublicense fee to broadcast the Event, the profits Defendants gained from proceeds of drinks or meals during the Event, as well as the damage JHP “has suffered damage to its goodwill and reputation and loss of its right and ability to control and receive fees for the transmission of the Event.” (ECF No. 21-1 at 10- 11). JHP ultimately seeks “statutory damages in the amount of $6,700.00 pursuant to [section] 605(e)(3)(C)(i)(II).” (Id. at 12).
FCA section 605(e)(3)(C)(i) provides that “[d]amages awarded by any court under this section shall be computed, at the election of the aggrieved party, in accordance with either of the following clauses: (I) the party aggrieved may recover the actual damages suffered by him as a result of the violation and any profits of the violator that are attributable to the violation which are not taken into account in computing the actual damages; in determining the violator's profits, the party aggrieved shall be required to prove only the violator's gross revenue, and the violator shall be required to prove his deductible expenses and the elements of profit attributable to factors other than the violation; or (II) the party aggrieved may recover an award of statutory damages for each violation of subsection (a) involved in the action in a sum 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).
Because JHP “had a proprietary interest in the intercepted communications, it qualifies as a ‘person aggrieved' within the meaning of” section 605(d)(6) of the FCA, and is thus “entitled to recover statutory damages of $1000 to $10,000 for each violation of [s]ection 605(a), as per [s]ection 605(e)(3)(C)(i)(II).” Fantasy Bar & Rest., 2018 WL 5018065, at *4. JHP may also receive an increased award of up to $100,000 on a finding that Defendants' violation of 605(a) was committed “willfully and for purposes of direct or indirect commercial advantage or private financial gain . . . .” 47 U.S.C. § 605(e)(3)(C)(ii). Under the FCA, the court may award such enhanced damages “in its discretion.” Id. Here, JHP seeks both statutory damages as well as enhanced damages for Defendants' willful violation of the FCA. (ECF Nos. 21-1 at 9-14; 28 at 3- 4 ¶¶ 7-16).
Under the FCA, “‘any person aggrieved' shall include any person with proprietary rights in the intercepted communication by wire or radio, including wholesale or retail distributors of satellite cable programming . . . .” 47 U.S.C. § 605(d)(6).
1. Damages recoverable from Bar 180
a. Statutory damages
In assessing statutory damages under section 605, “district courts in this Circuit have generally taken one of two different approaches to determining a base amount of statutory damages . . . .” Fantasy Bar & Rest., 2018 WL 5018065, at *4. “The first approach has been to award a flat sum, based on a plaintiff's submitted evidence as to the amount of the license fee that the particular establishment, given its size, would have had to pay to secure the rights to the broadcast in question.” Id.; see J & J Sports Prods., Inc. v. Sugar Café, Inc., No. 17 Civ. 5350 (RA), 2018 WL 324266, at *1 (S.D.N.Y. Jan. 5, 2018) (awarding $2,000 in statutory damages, equivalent to sub-license fee for the event); Joe Hand Promotions, Inc. v. Phillips, No. 06 Civ. 3624 (BSJ) (JCF), 2007 WL 2030285, at *4-5 (S.D.N.Y. July 16, 2007) (explaining two approaches and awarding $3,000 in statutory damages, which was more than the sub-license fee but less than the $10,000 threshold), adopted by, 2007 WL 2245351 (S.D.N.Y. Aug. 3, 2007).
“The second approach has been to multiply (a) the No. of patrons present in the establishment when the unauthorized display occurred by (b) a figure representing the estimated price that each patron would have had to pay to view an authorized broadcast of the event at home.” Fantasy Bar & Rest., 2018 WL 5018065, at *4. Courts employing this approach have typically used a multiplier of approximately $50 per patron, with several Eastern District of New York courts using $54.95 per patron as a “market-based standard.” Id. (collecting cases using multipliers between $50 and $54.95).
The Court may use one of these approaches, not both. See Sugar Café, 2018 WL 324266, at *1 (holding that statutory damages should be “the greater of two No. the flat fee that Plaintiff would have charged Defendants to air the programming at their establishment or the sum of what each individual who viewed the event at Defendants' establishment would have paid to view it at home”); 1400 Forest Ave., 2014 WL 4467774, at *8 (noting that awarding statutory damages on flat-fee or per-patron basis better reflects plaintiff's actual loss because “interested viewers would have watched the Event at home or [in defendant's establishment] . . . not in both places”).
JHP has submitted evidence showing that it sub-licensed broadcasting rights to the Event to commercial establishments of Bar 180's size-venues with a capacity of 151-200 persons-at a rate of $6,700.00. (ECF No. 21-4). Thus, JHP would have charged Bar 180 a flat fee of $6,700.00 for a legal broadcast of the Event. (ECF No. 28 ¶ 4). In addition, JHP has shown that 40-45 patrons were in Bar 180 during the Event. (ECF No. 21-5 at 1). At the commonly-used market rate of $54.95, JHP's damages could also be calculated as $2,472.75 ($54.95 * 45). Because the greater of the two approaches results in damages of $6,700.00, I respectfully recommend that JHP be awarded $6,700.00 in statutory damages against Bar 180. See Fantasy Bar & Rest., 2018 WL 5018065, at *5 (recommending that plaintiff be awarded flat-fee amount of statutory damages, which was greater than per-patron rate); Café Sugar, 2018 WL 324266, at *1 (same).
b. Enhanced damages
JHP seeks enhanced damages under section 605(e)(3)(C)(ii) on the grounds that Bar 180's violations of the FCA “were willful and committed for [] direct or indirect commercial advantage or private financial gain.” (ECF No. 28 at 4 ¶ 14). Specifically, JHP seeks enhanced damages of $20,100.00, which is treble their requested statutory damages of $6,700.00. (Id. at 4 ¶ 15).
“Courts use a variety of factors in determining whether a defendant's conduct is subject to enhanced damages for willfulness, such as allegations of: (1) repeated violations over an extended period of time; (2) substantial unlawful monetary gains; (3) significant actual damages to plaintiff; (4) defendant's advertising for the intended broadcast of the event; and (5) defendant's charging a cover charge or charging premiums for food and drinks.” Kingvision Pay-Per-View Ltd. v. Rodriguez, No. 02 Civ. 7972 (SHS), 2003 WL 548891, at *2 (S.D.N.Y. Feb. 25, 2003). “An award of enhanced damages ensures that a willful defendant's profits are disgorged and aims to deter similar acts of cable piracy in the future.” Sugar Café, 2018 WL 324266, at *2 (citation omitted).
Here, JHP has demonstrated several of these factors. First, JHP has shown that the Event was not the first occasion on which Defendants exhibited without authorization a program for which JHP held the exclusive license: on July 29, 2017, Defendants advertised their unauthorized broadcast of “Ultimate Fighting Championship® 214: Cormier v. Jones 2.” (ECF Nos. 21-6 ¶ 6; 21-9 at 3). Second, Defendants benefited from substantial monetary gains: not only did they not pay the $6,700 sub-license fee, they also collected $25 per patron in cover charges, plus profits from drinks and food those patrons ordered. (ECF Nos. 21-2 ¶¶ 7, 14; 21-5 at 1). See Sugar Café, 2018 WL 324266, at *2 (finding enhanced damages were justified where defendants charged $35 cover fee); J & J Sports Prods., Inc. v. Kosoria, No. 06 Civ. 2102 (KMK), 2007 WL 1599168, at *3 (S.D.N.Y. June 1, 2007) (noting that defendant received an “‘increase in patrons'” who likely visited to view the event and presumably “purchased food and/or drinks while viewing the Event”) (quoting Kingvision Pay-Per-View Ltd. v. Palaguachi, No. 06 Civ. 2509 (FB) (RER), 2007 WL 42994, at *4 (E.D.N.Y. Jan. 3, 2007)); Time Warner Cable of N.Y.C. v. Googie's Luncheonette, Inc., 77 F.Supp.2d 485, 490 (S.D.N.Y. 1999) (finding enhanced damages were appropriate to “encompass [the establishment's] profits on the sale of food and drink”). Third, Defendants advertised their broadcast of the Event. (ECF No. 21-9 at 2). See Joe Hand Promotions, Inc. v. Benitez, No. 18 Civ. 6476 (ARR) (PK), 2020 WL 5519200, at *6 (E.D.N.Y. Aug. 27, 2020) (finding enhanced damages justified where defendants advertised on social media two of plaintiff's events), adopted by, 2020 WL 5517240 (E.D.N.Y. Sept. 14, 2020).
Finally, JHP asserts that Defendants could not have “mistakenly, innocently, or accidentally intercepted” the Event. (ECF No. 21-2 ¶ 16). And, as noted above (supra at IV.B.1), although JHP has not pinpointed the mechanism by which Defendants unlawfully intercepted transmission of the Event, it is sufficient to show willfulness that JHP transmitted the Event on a closed-circuit broadcast, which Defendants could only have obtained through “a deliberate act.” Fantasy Bar & Rest., 2018 WL 5018065, at *7; see Googie's Luncheonette, 77 F.Supp.2d at 490 (“Signals do not descramble spontaneously, nor do television sets connect themselves to cable distribution systems.”).
As support for its request for treble enhanced damages, JHP cites several recent decisions by other courts in this District awarding JHP enhanced damages in amounts three-to-four times the awarded statutory damages. (ECF No. 28 at 5 ¶ 20 n.1). See Joe Hand Promotions, Inc. v. Lebron, No. 18 Civ. 10444 (CM) (GWG) (ECF No. 30) (S.D.N.Y. Sept. 18, 2019) (awarding $5,000 in statutory damages under section 605(e)(3)(C)(i)(II) and $20,000 in enhanced damages under section 605(e)(3)(C)(ii)); Joe Hand Promotions, Inc. v. Diaz Rest., Inc., No. 18 Civ. 10381 (CS) (ECF No. 22) (S.D.N.Y. Aug. 27, 2019) (awarding $5,000 in statutory damages under section 605(e)(3)(C)(i)(II) and $20,000 in enhanced damages under section 605(e)(3)(C)(ii)); Joe Hand Promotions, Inc. v. Apt. 78, Inc., No. 18 Civ. 10477 (JMF) (ECF No. 22) (S.D.N.Y. Apr. 5, 2019) (awarding $5,000 in statutory damages under section 605(e)(3)(C)(i)(II) and $20,000 in enhanced damages under section 605(e)(3)(C)(ii)); Joe Hand Promotions, Inc. v. Renzo Gracie Newburgh 2 Corp., No. 16 Civ. 8467 (NSR) (ECF No. 26) (S.D.N.Y. Oct. 5, 2018) (awarding $5,000 in statutory damages under section 605(e)(3)(C)(i)(II) and $15,000 in enhanced damages under section 605(e)(3)(C)(ii)). The Court recognizes that several courts in the Eastern District of New York have also awarded enhanced damages triple the amount of statutory damages, or more. See Fantasy Bar & Rest., 2018 WL 5018065, at *7 (collecting Eastern District of New York cases).
One court in this District noted in 2018, that, to date, “[t]he practice of trebling statutory damages . . . has generally not been followed by courts in this [D]istrict, which, on the basis of similar factual allegations, have instead tended to award a flat sum as enhanced damages.” Fantasy Bar & Rest., 2018 WL 5018065, at *7 (collecting Southern District of New York cases awarding $8,000 to $10,000 as enhanced damages and recommending award of $10,000 in enhanced damages).
As shown by the judgments JHP has cited, each of which post-date the decision in Fantasy Bar & Restaurant, the more current standard for enhanced damages in this District appears to be in line with our colleagues in the Eastern District-to award enhanced damages treble the amount of the statutory damages. Accordingly, I respectfully recommend that JHP be awarded $20,100.00 ($6,700.00 * 3) in enhanced damages.
c. Attorneys' fees and costs
“An award of costs, including attorneys' fees, is mandatory under [section] 605.” Phillips, 2007 WL 2030285, at *6 (citing 47 U.S.C. § 605(e)(3)(B)(iii) and Int'l Cablevision, Inc. v. Sykes, 997 F.2d 998, 1009 (2d Cir. 1993)). JHP has provided billing records in support of its request for $1,240.00 in attorneys' fees and $545.00 in costs. (ECF Nos. 28-1; 33). JHP's counsel recorded 3.1 hours on this matter at an hourly rate of $400. (ECF No. 28-1; 33). Courts in the Eastern District of New York have recently deemed an hourly rate of $300 per hour to be reasonable for the same counsel JHP used in this case. Benitez, 2020 WL 5519200, at *7 (approving $300 hourly rate for Jekielek); Zuffa, LLC v. S. Beach Saloon, Inc., No. 15 Civ. 6355 (ADS) (AKT), 2019 WL 1322620, at *9 (E.D.N.Y. Mar. 6, 2019) (same), adopted by, 2019 WL 1317568 (E.D.N.Y. Mar. 22, 2019). Accordingly, I respectfully recommend that $300, not $400, is a reasonable hourly rate.
Based on the Second Jekielek Declaration and billing records in support of the request for attorneys' fees, I find the time expended, 3.1 hours, to be reasonable. See Benitez, 2020 WL 5519200, at *7 (finding 2.4 hours to be reasonable time expended on FCA action culminating in default judgment); Phillips, 2007 WL 2030285, at *6 (finding 3.75 hours to be reasonable time expended on FCA action culminating in default judgment). Therefore, I respectfully recommend an award of attorneys' fees in the amount of $930.00 ($300 * 3.1).
JHP request for costs in the amount of $545.00, comprised of the $400 filing fee, which is reflected on the Court's docket (see ECF No. 1), and $145 for service fees, for which it has provided a receipt. (ECF Nos. 21-10; 28-1). These amounts are reasonable. See Phillips, 2007 WL 2030285, at *6 (recommending award of costs of $550 for filing and service fees). Accordingly, I respectfully recommend that JHP be awarded $545.00 in costs.
2. Damages recoverable from Batista
JHP seeks to hold Batista jointly and severally liable for all damages, including enhanced damages, awarded against Bar 180. (ECF No. 1 at 6). While the Court finds a sufficient basis for assessing against Batista $6,700.00 in statutory damages and $1,475.00 in attorneys' fees and costs, I respectfully disagree that Batista should also be held liable for enhanced damages for willful violation of the FCA. “Relying on the reasoning of Second Circuit decisions regarding copyright law, several courts in this [D]istrict have concluded that, where an individual defendant is shown to have had ‘a right and ability to supervise' the [FCA] violations of a corporate defendant and ‘a strong financial interest' in the unauthorized activities, no more need be established to find the individual defendant vicariously liable for the corporation's conduct.” Fantasy Bar & Rest., 2018 WL 5018065, at *8 (collecting cases). Thus, “on damages inquests, these courts have simply accepted that boilerplate language in the pleadings, alleging that individual defendants had a supervisory capacity over and a direct financial interest in the infringing activities, is sufficient to find vicarious liability for both statutory and enhanced damages.” Id. More recently, however, one court in this District, on closer scrutiny, determined that such allegations were insufficient for the plaintiff to meet its burden of proving an entitlement to enhanced damages against an individual defendant with reasonable certainty. Sugar Café, 2018 WL 324266, at *1, 3. The Sugar Café court held that allegations of an individual defendant's right and ability to supervise along with a financial interest were not a sufficient “evidentiary basis” on which to conclude that the individual defendant acted willfully for purposes of imposing enhanced damages under section 605(e)(3)(C)(ii). Id. at *3 (“Plaintiff has not established, for example, that the [individual defendant] was personally involved in approving the decoding of the signal or otherwise knew that the fight was being unlawfully intercepted.”). Other courts have reached the same conclusion. See J & J Sports Prods., Inc. v. Ahuachapan Corp., 422 F.Supp.3d 652, 660 (E.D.N.Y. 2019) (declining to award enhanced damages against individual defendant as to whom plaintiff “alleged no facts that would raise an inference of [his] willful, direct participation in the violation”); Fantasy Bar & Rest., 2018 WL 5018065, at *9 (recommending no enhanced damages against individual defendant where “[n]othing about the[] allegations . . . speaks to the question of whether [individual defendant] personally engaged in knowing, willful conduct, that, under the [FCA] would warrant an award against her of enhanced damages”).
The circumstances of this case align with Sugar Café, Ahuachapan, and Fantasy Bar & Restaurant. JHP has alleged that, based on his status as Bar 180's principal, Batista “had the right and ability to supervise and an obvious and direct financial interest in the activities of” Bar 180. (ECF No. 1 ¶ 9). In addition, JHP has shown that Batista was listed on Bar 180's New York State liquor license as Bar 180's “Principal.” (ECF No. 21-8 at 2). These facts, however, do not address whether Batista “personally engaged in knowing, willful conduct that” would warrant an award of enhanced damages against him under section 605(e)(3)(C)(ii). Fantasy Bar & Rest., 2018 WL 5018065, at *9. Accordingly, I recommend that Batista be held jointly and severally liable for the statutory damages and attorneys' fees and costs, but not the enhanced damages, awarded against Bar 180.
D. Pre-Judgment Interest
JHP has requested an award of “interest” in its Complaint, although its Damages Submission does not mention interest or provide any indication of how interest would be calculated. (Compare ECF No. 1 at 6 with ECF No. 28). Interpreting JHP's reference to “interest” as a request for pre-judgment interest, I respectfully recommend that JHP's request be denied.
“Although no statute authorizes an award of pre-judgment interest for violations of [s]ections 553 and 605 of the [FCA], a district court has discretion to impose a pre-judgment interest award ‘to make a plaintiff whole.'” Fantasy Bar & Rest., 2018 WL 5018065, at *9 (quoting Williams v. Trader Publ'g Co., 218 F.3d 481, 488 (5th Cir. 2000)). Likewise, the Second Circuit has permitted pre-judgment interest awards, absent express statutory authorization, “when the awards [are] fair, equitable and necessary to compensate the wronged party fully.” Wickham Contracting Co. v. Loc. Union No. 3, 955 F.2d 831, 835 (2d Cir. 1992).
Pre-judgment interest is not warranted here for two reasons. First, the recommended statutory and enhanced damages are intended to make JHP “whole . . . without need for pre-judgment interest to serve that purpose.” Fantasy Bar & Rest., 2018 WL 5018065, at *9; see Joe Hand Promotions, Inc. v. Marius, No. 05 Civ. 8472 (DAB) (THK), 2007 WL 2351065, at *5 (S.D.N.Y. July 3, 2007) (finding that “an award of prejudgment interest would result in a windfall, since Plaintiff was not deprived of the use of funds equivalent to the statutory damages being awarded” and recommending denial of pre-judgment interest). Second, “New York law does not award pre-judgment interest on punitive damages, and damages under [section] 605 are ‘analogous to punitive damages in that they are designed to deter others from similar infringing activity.'” Garden City Boxing Club, Inc. v. Guerra, No. 05 Civ. 3712 (SLT) (SMG), 2007 WL 539156, at *5 (E.D.N.Y. Feb. 16, 2007) (quoting Kingvision Pay-Per-View Ltd. v. Olivares, No. 02 Civ. 6588 (JES) (RLE), 2004 WL 744226, at *5 (S.D.N.Y. Apr. 5, 2004)).
Accordingly, I respectfully recommend that the Court decline to award JHP pre-judgment interest.
V. CONCLUSION
For the reasons set forth above, I respectfully recommend that JHP's Motion be GRANTED, and a default judgment in favor of JHP be entered in the following amounts:
1) Bar 180 and Batista be jointly and severally liable for: (a) statutory damages under 47 U.S.C. § 605(e)(3)(C)(i)(II) in the amount of $6,700.00; (b) attorneys' fees in the amount of $930.00; and (c) costs in the amount of $545.00; and
2) Bar 180 be liable for enhanced damages under 47 U.S.C. § 605(e)(3)(C)(ii) in the amount of $20,100.00.
JHP is directed to serve a copy of this Report and Recommendation on Defendants and to file proof of service on the docket.
NOTICE OF PROCEDURE FOR FILING OBJECTIONS TO THIS REPORT AND RECOMMENDATION
The parties shall have fourteen (14) days (including weekends and holidays) from service of this Report and Recommendation to file written objections pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure. See also Fed.R.Civ.P. 6(a), (d) (adding three additional days when service is made under Fed.R.Civ.P. 5(b)(2)(C), (D) or (F)). A party may respond to another party's objections within fourteen (14) days after being served with a copy. Fed.R.Civ.P. 72(b)(2). Such objections, and any response to objections, shall be filed with the Clerk of the Court. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), (d), 72(b). Any requests for an extension of time for filing objections must be addressed to Judge Cronan.
FAILURE TO OBJECT WITHIN FOURTEEN (14) DAYS WILL RESULT IN A WAIVER OF OBJECTIONS AND WILL PRECLUDE APPELLATE REVIEW. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), (d), 72(b); Thomas v. Arn, 474 U.S. 140 (1985).