Opinion
01 Civ. 4355 (LLS) (FM)
July 23, 2002
REPORT AND RECOMMENDATION TO THE HONORABLE LOUIS L. STANTON
This Report and Recommendation was prepared with the assistance of Nadia Jones, a student at Fordham Law School.
I. Introduction
In this action, plaintiff Cablevision Systems New York City Corporation ("Cablevision") alleges that defendant Kim Miller ("Miller") illegally intercepted cable television programming signals, in violation of the Cable Communications Policy Act ("Communications Act"), as amended, 47 U.S.C. § 553(a)(1) and 605(a).
Following Miller's failure to answer or otherwise respond to the complaint, a default judgment was entered and the matter was referred to me to conduct an inquest regarding the damages, if any, to be awarded to Cablevision.
By order dated December 10, 2001, I directed Cablevision to serve and file an inquest memorandum by January 7, 2002, setting forth its proof of damages, as well as proposed findings of fact and conclusions of law. Miller was given until January 21, 2002, to file opposition papers. After a brief extension requested by Cablevision, its papers were timely filed on January 14, 2002. Thereafter, however, Miller failed to file any opposition papers or contact this Court.
During the pendency of this inquest, the Court has sent Miller a letter by certified mail advising her of the schedule for the submission of papers. The letter was returned as unclaimed.
For the reasons set forth below, I recommend that Cablevision be awarded judgment in the amount of $3,212.50, consisting of statutory damages in the amount of $1,000.00, attorneys' fees in the amount of $2,032.50, and costs in the amount of $ 180.00.
As the Second Circuit has indicated, an inquest may be held on the basis of documentary evidence, "as long as [the Court has] ensured that there was a basis for the damages specified in the default judgment." Transatlantic Marine Claims Agency. Inc. v. Ace Shipping Corp., 109 F.3d 105, 111 (2d Cir. 1997) (quoting Fustok v. Conti Commodity Services. Inc., 873 F.2d 38, 40 (2d Cir. 1989).
II. Background
In light of Miller's default, Cablevision's properly-pleaded allegations must be accepted as true. 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); Time Warner Cable of N.Y.C. v. Barnes, 13 F. Supp.2d 543, 547 (S.D.N.Y. 1998); Cablevision Sys. N.Y.C. Corp. v. Lokshin, 980 F. Supp. 107, 111 (E.D.N.Y. 1997). My findings of fact and conclusions of law, based upon the unrefuted allegations of the complaint and Cablevision's inquest papers, are as follows:
Cablevision is a corporation registered to conduct business in New York, with offices at 1111 Stewart Avenue, Bethpage, New York. (Compl. ¶ 4). At all relevant times, Miller resided at 4030 Bronx Boulevard, Apt. 2C, Bronx, New York. (Id. ¶ 5; Aff. of Charles Carroll, sworn to on Jan. 10, 2002 ("Carroll Aff."), ¶ 16).
Pursuant to certain franchises, Cablevision constructs, operates, and maintains cable television systems in various areas of New York State. (Compl. ¶ 6). Cablevision offers several "packages" of programming services in those areas to subscribers who request and pay for them. (Id. ¶ 6, 7). The "Basic" service package provides enhanced quality reception of broadcast stations, as well as a limited number of additional programming services, at a rate of approximately $13 per month. (Carroll Aff. ¶ 3). The "Family" service package includes all of Cablevision's programming services, except for its "premium" and "pay-per-view" services, at a rate of approximately $30 per month. (Id).
Cablevision's residential subscribers may elect to subscribe to one or more "premium" channels, such as Cinemax, Home Box Office, or Showtime, for an additional monthly charge averaging between $1.95 and $14.95 per service. (Id. ¶ 4). Cablevision customers with Basic and Family service may also subscribe to a premium service package, at a monthly rate ranging from $40.75 to $80.95, to receive all of the Cablevision programming services included in the Family service package, plus certain premium services, but not its pay-per-view programming services. (Id.).
In addition, residential subscribers may order, on a pay-per-view basis, such specialized programming services as movies and sporting events. (Id. ¶ 5). The pay-perview service includes selections which typically range in price from approximately $4.95 to $49.95 per selection. (Id.). The aggregate value of each pay-per-view event offered over a typical month, assuming each is viewed only once, is hundreds of dollars. (Id.).
Cablevision receives signals for nearly all of its services from satellites. (Compl. ¶ 10). Thereafter, the signals for all of Cablevision's cable and television services are transmitted to subscribers' homes through a network of cable wiring and equipment. (Id.).
Each Cablevision subscriber is entitled to receive only the level and amount of programming that the subscriber has selected and purchased. (Carroll Aff. ¶ 7). To prevent subscribers from receiving programming services for which they have not paid, Cablevision encodes or "scrambles" the signals for its services. (Compl. ¶ 11). Subscribers are provided with converter-decoder boxes programmed to authorize the viewing of the Cablevision services that have been purchased by those subscribers. (Id.). These converter-decoder boxes decode the scrambled Cablevision services for which the customer has subscribed. (Id.). Programming services not purchased remain scrambled and are therefore not viewable on a subscriber's television set. (Id.).
On May 27, 1999, during a service call requested by a member of Miller's household, Cablevision's technicians discovered an unauthorized modification to Miller's authorized Cablevision converter-decoder device. (Carroll Aff. ¶ 15). More specifically, because of a modification installed on the rear of the device, the technicians were able to view all of Cablevision's premium and pay-per-view channels, for which Miller had not subscribed. (Id.). Later the same day, the technicians removed Miller's converterdecoder from her residence, and Miller signed a receipt acknowledging that she was returning a converter-decoder device that had been modified. (Id.). Cablevision retested the device at its facilities and found that it had been modified to descramble all of Cablevision's premium and pay-per-view programming services without authorization. (id).
Miller subscribed to Cablevision's Family service and one additional premium channel, at an approximate cost of $41.90 per month, from December 24, 1998, through the date that the altered converter-decoder was removed from her residence. (Id. ¶ 16). She therefore had access to unauthorized programming for a maximum of approximately five months. (Id.). During this period, Miller paid Cablevision approximately $209.50 ($41.90 x 5 months).
Although she was paying for only one premium channel, Miller knew that her use of a converter-decoder that had been modified without authorization would allow her to descramble all of Cablevision's premium, pay-per-view and other scrambled programming, and thereby gain access to additional Cablevision's programming services without paying for them. (Compl. ¶ 21).
III. Discussion
A. Statutory Damages
Sections 553 and 605 of Title 47 of the United States Code prohibit the unauthorized interception and reception of cable programming services. Barnes, 13 F. Supp.2d at 547-48 (citing Int'l Cablevision. Inc. v. Sykes, 75F.3d 123, 133 (2d Cir. 1996)); Lokshin, 980 F. Supp at 112 ("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. . . . Thus, when pay television programming is transmitted over both cable and satellite mediums, both statutes apply." Id. (quoting Sykes, 75 F.3d at 130)).
47 U.S.C. § 553(a)(1) 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. § 605(a) 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.
When a court determines that a defendant's conduct has violated both sections 553 and 605 of the Communications Act, a plaintiff may recover damages under one of those sections only. Sykes, 75 F.3d at 127; Barnes, 13 F. Supp. at 548; Am. Cablevision of Queens v. McGinn, 817 F. Supp. 317, 320 (E.D.N.Y. 1993). An aggrieved cable operator may, however, elect to recover damages under section 605 in consideration of its higher damages award. Barnes 13 F. Supp.2d at 548.
Cablevision's submissions establish that Miller maintained in her residence an authorized converter-decoder which incorporated unauthorized modifications, and which therefore could be used to descramble all of Cablevision's encrypted premium and pay-per-view cable television signals. (See Carroll Aff. ¶¶ 15-17; Compl. ¶¶ 18-20). Miller therefore has violated 47 U.S.C. § 553 and 605. Moreover, Cablevision possesses "proprietary rights" in the communications that Miller intercepted without authorization, and therefore is a "person aggrieved" within the meaning of 47 U.S.C. § 553(c)(1) and 605(e)(3)(A).
Cablevision has elected to recover damages under section 605, which provides that a court may award an aggrieved party a statutory damage award 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). Not surprisingly, Cablevision seeks to recover "the upper end" of the maximum statutory damages allowable — $10,000 — in addition to its attorneys' fees and costs.
Although the statute provides little guidance on how damages should be assessed, some courts have calculated statutory damages based upon the monthly value of the defendant's unauthorized cable reception. See Loshkin, 980 F. Supp at 113 (finding award of $125 per month for pilfered pay-per-view services to be reasonable); McGinn, 817 F. Supp at 320 (imposing statutory damages of $250 per month per unauthorized decoder); Time Warner Cable of N.Y. v. Rivera, No. 94 Civ. 2339, 1995 WL 362429, at *4 (E.D.N.Y. June 8, 1995)(Gold, Mag. J.) (recommending approximately $1,000 in damages for eight months of pay-per-view usage. Other courts have simply imposed damages in a flat amount without explanation. See, e.g., Barnes, 13 F. Supp.2d at 548 (awarding Time Warner Cable a flat amount of $1,000 in statutory damages from each defendant).
To determine where on the statutory damages spectrum the award against Miller should fall, it is appropriate to consider first the value and duration of the unauthorized cable reception. During the relatively brief period that Miller was a Cablevision subscriber, the cost of obtaining all of Cablevision's premium services would have been $80.95 per month. (Carroll Aff. ¶ 5). Accordingly, Miller would likely have paid Cablevision at least $404.75 ($80.95 x 5 months) for such service had she not had an improperly-modified device. Because Miller paid Cablevision only $209.50, Cablevision's loss due to Miller's unauthorized access to premium channels, not including pay-per-view, is at least $195.25 ($404.75 — $209.50), if one assumes that she used the device to access all of Cablevision's available premium channels.
In addition, although it is unlikely that Miller would have purchased every pay-per-view event each time it was shown, it is reasonable to assume that she may have watched at least three minimum-cost events per month, plus one maximum-cost event. This would have resulted in an additional monthly loss to Cablevision of at least $64.80 (($4.95 x 3) + $49.95), or $324 ($64.80 x 5 months) during the period she was a Cablevision subscriber. (Id.). Thus, the actual loss that Cablevision sustained due to Miller's unauthorized access is approximately $519.25 (($195.25 + $324). However, as noted above, the statutory minimum prescribed by section 605 is $1,000. Accordingly, because this amount is significantly greater than Cablevision's likely actual damages, I recommend that Cablevision recover only $1,000 in statutory damages.
B. Attorney's Fees
Cablevision also alleges that it incurred attorneys' fees and costs in the amount of $2,212.50, in the course of prosecuting this action. (See Aff. of William B. Jung, Esq., sworn to on Jan. 11, 2002 ("Jung Aff."), ¶ 5).
Section 605 authorizes a court to "direct the recovery of full costs, including the award of reasonable attorneys' fees to an aggrieved party who prevails." 47 U.S.C. § 605(e)(3)(B)(iii). When fixing a reasonable rate for attorneys' fees, courts may consider and apply prevailing market rates "for similar services by lawyers of reasonably comparable skill, experience, and reputation." Gierlinger v. Gleason, 160 F.3d 858, 882 (2d Cir. 1998) (quoting Blum v. Stenson, 465 U.S. 886, 895 n. 11, 104 S.Ct. 1541, 1547 n. 11, 79 L.Ed.2d 891 (1984)). Moreover, a court may rely on its own knowledge of private firm hourly rates in estimating reasonable attorneys' fees. Miele v. New York State Teamsters Conf. Pension Ret. Fund, 831 F.2d 407, 409 (2d Cir. 1987).
In the Second Circuit, a party seeking an award of attorneys' 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). Attorneys' fees applications that do not contain such supporting date "should normally be disallowed." Id. at 1154. See also Kingvision Pay-Per-View v. The Body Shop, No. 00 Civ. 1089, 2002 WL 393091, at *5 (S.D.N.Y. Mar. 13, 2002)(Swain, J.) (denying award of attorneys' fees when information regarding how the fees were accumulated was not provided even though requested amount was reasonable).
In prosecuting this action, Cablevision engaged the services of Lefkowitz, Louis Sullivan, L.L.P., a firm which handles many similar cases. On its behalf, attorney William B. Jung has submitted an affidavit 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 devoted to this action and the nature of the work they performed; and (d) the billing rate at which each was compensated.
The legal fees incurred by Cablevision in the course of prosecuting this action against Miller may be summarized as follows:
Timekeeper Total Hours Hourly Rate Total William B. Jung, Esq. 6.1 $165.00 $1,006.50 Shaun K. Hogan, Esq. 3.9 $165.00 $643.50 Paralegals 4.5 $85.00 $382.50 Total: $2,032.50 (Jung Aff. ¶¶ 3-5 Ex. B). These charges were incurred to draft the complaint and default and inquest papers and attend a conference with the Court.Based upon my review, both the hours and the billing rates incurred by Cablevision seem reasonable. I therefore recommend that Cablevision be awarded attorney's fees in the amount of $2,032.50.
C. Costs
Cablevision also seeks to recover $180 in costs, consisting of a $30 fee for process service, and filing fees in the amount of $150. (Id. ¶ 5). This request should be granted.
III. Conclusion
For the reasons set forth above, I recommend that Cablevision be awarded damages, including attorneys' fees and the costs incurred in prosecuting this action, in the amount of $3,212.50
IV. Notice of Procedure for Film of Objections to this Report and Recommendation
The parties are hereby directed that if they have any objections to this Report and Recommendation, they must, within ten days from today, make them in writing, file them with the Clerk of the Court, and send copies to the chambers of the Honorable Louis L. Stanton, United States District Judge, and to the chambers of the undersigned, at the United States Courthouse, 500 Pearl Street, New York, New York 10007, and to any opposing parties. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), 6(e), 72(b). Any requests for an extension of time for filing objections must be directed to Judge Stanton. Any failure to file timely objections will result in a waiver of those objections for purposes of appeal. See Thomas v. Arn, 474 U.S. 140, 106 S.Ct. 466, 88 L.Ed.2d 435 (1985); Frank v. Johnson, 968 F.2d 298, 300 (2d Cir. 1992); 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), 6(e), 72(b).