Opinion
05 Civ. 10179 (BSJ) (KNF).
April 16, 2010
REPORT AND RECOMMENDATION
INTRODUCTION
The plaintiff, Garden City Boxing Club, Inc. ("Garden City"), commenced this action seeking damages from 284 Nelly Restaurant Corp., d/b/a Nelly Restaurant ("Nelly Restaurant"), and Ivan Lopez ("Lopez"), the "officer, director, shareholder and/or principal" of Nelly Restaurant (collectively, the "defendants"), for alleged violations of 47 U.S.C. §§ 553 and 605. Garden City served each defendant with a summons and a copy of the complaint on December 2, 2005, by causing two copies of the pleadings and summons to be delivered to Lopez. Both summonses were returned executed and were docketed by the Clerk of Court. Neither defendant answered or otherwise appeared timely in the action.
Garden City made an application to the Honorable John E. Sprizzo, to whom the case was then assigned, for an order, pursuant to Rule 55(a) of the Federal Rules of Civil Procedure, directing the entry of a judgment by default against the defendants. The application was granted. In January 2009, the case was reassigned to your Honor. Thereafter, your Honor referred the matter to the undersigned to conduct an inquest and to report and recommend what amount of damages, if any, should be awarded to Garden City. In connection with the inquest, by an Order dated June 18, 2009, the parties were directed to submit affidavits and memoranda of law to the Court. Garden City complied with the Court's directive; the defendants did not.
In a Statement of Damages, submitted by the plaintiff, Garden City contends it is entitled to recover, from each defendant: (1) damages, up to $10,000, as provided in 47 U.S.C. § 605(e)(C)(i)(II); (2) enhanced damages, up to $100,000, owing to the defendants' willful violation of 47 U.S.C. § 605(a); and (3) costs related to this action, $805.75. The "costs" are identified as: (a) $250, for "filing fees"; (b) $200, for the process server's fee; and (c) $1,161.50, for attorney's fees. According to the plaintiff, each defendant is liable for one-half the costs incurred.
BACKGROUND
At an inquest, a reviewing court accepts as true all the well-pleaded factual assertions in the complaint, except those relating to damages.See Au Bon Pain Corp. v. Artect, Inc., 653 F.2d 61, 65 (2d Cir. 1981). The plaintiff is also entitled to all reasonable inferences from the evidence adduced. See id. However, claims that are not well-pleaded, or facts that the pleadings do not establish, cannot support a judgment by default. See Bambu Sales, Inc. v. Ozak Trading, Inc., 58 F.3d 849, 854 (2d Cir. 1995) (citing Trans World Airlines, Inc. v. Hughes, 449 F.2d 51, 69 [2d Cir. 1971] [holding that a default judgment entered on the well-pleaded allegations of a complaint establishes liability], rev'd onother grounds, Hughes Tool Co. v. Trans World Airlines, Inc., 409 U.S. 363, 93 S. Ct. 647). Based upon the complaint, the documents submitted by the plaintiff and the Court's review of the entire court file in this action, the following findings of fact are made.
Garden City is a corporation organized under the laws of California, with its principal place of business in Campbell, California. Nelly Restaurant is a "business entity," with its principal place of business in New York County, New York. Ivan Lopez "is an officer, director, shareholder and/or principal" of Nelly Restaurant.
Garden City entered into a license agreement, through which it acquired the rights, to distribute, to commercial establishments, a November 27, 2004 boxing match, identified by Garden City as the "Barrera/Morales Program" ("the Program"), including "all undercard bouts and the entire television broadcast." Garden City was granted the right to transmit the Program "via closed circuit television and via encrypted satellite signal. Said event originated via satellite uplink and was subsequently transmitted to cable systems and satellite companies via satellite signal." The plaintiff entered into "subsequent agreements with various entities in the State of New York, allowing them to publicly exhibit the Program to their patrons." Nelly Restaurant did not purchase, from Garden City, any broadcast rights to the November 27, 2004 Program. Garden City alleges Nelly Restaurant "unlawfully intercepted, received and/or de-scrambled [the] satellite signal and did exhibit the Program . . . at the time of its transmission willfully for purposes of direct or indirect commercial advantage or private financial gain." In doing so, Garden City contends the defendants "purposefully defraud[ed] the Plaintiff of money."
In support of its allegations, Garden City submitted to the Court, as an inquest exhibit, the affidavit of Bruce W. Ford ("Ford"), an "auditor" it engaged, who observed the Program being shown in Nelly Restaurant. In the affidavit, Ford states, inter alia, he entered Nelly Restaurant, on "November 27, 2004," at 12:55 a.m., and observed a video image, on a nineteen-inch television monitor located in the dining area. Ford asserts that he did not pay a "cover charge" to enter Nelly Restaurant, and there was no "minimum drink requirement," for which he was charged. Ford estimated the maximum number of patrons Nelly Restaurant could hold is 22. Ford maintains that the "round" he viewed of the Program was the "end of fight." He watched "Barrera in the ring raising his hands in victory," and saw "the final punch stat." According to the affidavit, Ford remained at Nelly Restaurant until "November 28, 2004," and left the restaurant at 1:00 a.m. Ford observed six patrons inside the restaurant, when he entered, and three patrons remained, when he left. Ford's affidavit-which appears to be a preprinted form, soliciting certain information that Ford was to detail in designated spaces alongside each inquiry-does not identify the "trunk colors" of the boxers, the "on-screen time" for the Program footage he viewed at Nelly Restaurant, or "distinguishing things about the establishment," although responses to such inquiries are sought through the preprinted affidavit form.
The Court's file also contains an affidavit by Joseph Gagliardi ("Gagliardi"), president of Garden City, which was submitted in support of the plaintiffs' motion for judgment by default. Gagliardi states that neither Nelly Restaurant nor Lopez purchased the rights to exhibit the Program, and, "to the best of [his] knowledge[,] this programming is not and cannot be 'mistakenly or innocently intercepted.'" Attached to Gagliardi's affidavit is a copy of the "Closed Circuit Television License Agreement," between Top Rank, Inc., a "promoter," and Garden City. This agreement grants Garden City "exclusive license to exhibit, only within the fifty states of the United States of America[,] . . . [the] live telecast of the [Erik Morales v. Marco Antonio Barrera] Bout and accompanying undercard matches, . . . simultaneously with the Event, only at commercial closed circuit television exhibition outlets. . . ." Gagliardi notes that the "residential price" for the Program was $54.95. A "rate card," providing the rate commercial establishments were charged, was also submitted, which states, inter alia, the rate, for an establishment with seating for 1-50 patrons, was $800.00.
DISCUSSION
Garden City alleges, in its complaint, that the defendants violated 47 U.S.C. §§ 553 and 605, by broadcasting the Program. The Federal Communications Act of 1934 proscribes intercepting, or receiving assistance in intercepting, a communications signal transmitted over a cable system, without the authorization of a cable operator or pursuant to law, and prohibits the unauthorized divulging or publishing of interstate or foreign communications. See 47 U.S.C. §§ 553 and 605. Garden City asserts the defendants intercepted and/or received an interstate communication of the Program's transmitted signal.
The facts alleged in the complaint, as well as Ford's and Gagliardi's affidavits establish that Nelly Restaurant displayed the Program in its dining room, without having paid Garden City for the right to receive access to the Program. Since the defendants were not among the commercial establishments who contracted with the plaintiff to exhibit the Program, their interception and exhibition of the Program was unauthorized and unlawful. Therefore, the defendants are liable for violating §§ 553 and 605 of the Federal Communications Act.
Although the record, as a whole, demonstrates that Nelly Restaurant did not purchase rights to exhibit the Program in its dining room, the Court notes that Ford's affidavit contains careless errors. For instance, Ford states he entered Nelly Restaurant on November 27, at 12:55 a.m., and left on November 28, at 1:00 a.m. The Court is also mindful that the affidavit is dated December 6, 2004-more than one week from the time he visited Nelly Restaurant- and it is not clear whether the details he provides in his affidavit are based on his memory, contemporaneous notes he took while at the restaurant, or were taken from some other source. In addition, the preprinted affidavit form Ford used lacks responses, to inquiries regarding the "on-screen time," "trunk colors" of the fighters, and "distinguishing things [observed] about the establishment." Despite these omissions and the date discrepancy, the record, in its entirety, establishes that Nelly Restaurant exhibited the Program at issue in this case.
Damages
When a court determines that a defendant's conduct has violated both 47 U.S.C. §§ 553 and 605, a plaintiff may recover damages under only one of those sections. See, e.g., Time Warner Cable of New York City v. Barnes, 13 F. Supp. 2d 543, 548 (S.D.N.Y. 1998) (citing American Cablevision of Queens v. McGinn, 817 F. Supp. 317, 320 [E.D.N.Y. 1993]).
Garden City has elected to recover damages from the defendants pursuant to Section 605, which authorizes recovery of either actual or statutory damages. See 47 U.S.C. § 605(e)(3)(C)(i)(I-II). 47 U.S.C. § 605(e)(3)(C)(i)(II) authorizes the court to award statutory damages in an amount "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). Section 605(e)(3)(C)(ii) provides further that the court has discretion to increase the award of damages by an amount not more than $100,000, if it finds that the violation in question was committed willfully and for purposes of commercial advantage or private financial gain. See 47 U.S.C. § 605(e)(3)(C)(ii).
In this case, the plaintiff seeks $10,000 in statutory damages and $100,000 in enhanced damages from each defendant. "The measurement of damages is within the broad discretion of the District Court." J J Sports Prods., Inc. v. Dehavalen, No. 06 Civ. 1699, 2007 WL 294101, at *2 (S.D.N.Y. Jan. 30, 2007). "The court may impose a damage award on what the 'court considers just.'" Id. (quoting 47 U.S.C. § 605(e)(3)(C)(i)(II)). Typically, courts take a number of factors into account when determining whether an award of statutory damages is "just," including the monetary losses sustained by the plaintiff, as a result of the defendant's unauthorized interception and exhibition of a program to which the plaintiff had sole rights to distribute, the defendant's financial circumstances and the burden that damages would place upon a defendant. See id. Judicial officers in this district generally take one of two approaches in determining the amount of statutory damages to award a plaintiff against an establishment which has intercepted and exhibited satellite cable programming unlawfully: (1) a per-patron approach, in which the court multiples the number of patrons by a dollar amount; or (2) a flat sum approach. See id.; see also Kingvision Pay-Per-View, Ltd. v. Ruiz, No. 04 Civ. 6566, 2005 U.S. Dist. LEXIS 3856, at *6, 2005 WL 589403, at *2 (S.D.N.Y. Mar. 9, 2005).
In J J Sports, the Court elected to utilize the "per-patron approach" in determining the amount of statutory damages to award the plaintiff. J J Sports, 2007 WL 294101, at *3. The court awarded $1,800 in statutory damages to the plaintiff, based on an admittedly "arbitrary" $150 per patron calculation. See id. The court determined the award was reasonable and sufficient to punish and deter the defendants from future violations of the relevant statute, while taking into account the plaintiff's lost revenue and any profits gained by the defendants as an indirect result of their unlawful acts. See id.
Here, the plaintiff has requested an award of $10,000 per defendant, which is the maximum statutory-damages award permitted under 42 U.S.C. § 605(e)(3)(C)(i)(II). However, the plaintiff has not provided information to the Court supporting its request for this amount. According to the plaintiff's submissions, if the defendants had purchased the right to display the Program at the plaintiff's contractual commercial rate, they would have paid it $800.00. Moreover, if the six Nelly Restaurant patrons had purchased the right to view the Program at the plaintiff's contractual residential rate, each would have paid it $54.95. Based on this information, the Court finds that it is not reasonable to award the plaintiff statutory damages that exceed ten times the amount it would have received had the defendants acquired the right to broadcast the Program at the contractual commercial rate, or had each of the defendants' six patrons obtained the right to watch the Program in his or her home, at the contractual residential rate. Therefore, the Court finds that a statutory-damages award of $1,000 is appropriate. This amount is the statutory minimum amount that can be awarded, and is the equivalent of charging approximately $166 for each of the six patrons who viewed the Program at Nelly Restaurant, during the early morning hours of November 28, 2004. See id. This amount takes into account any profits the defendants may have received indirectly as a result of intercepting and exhibiting the program without authorization, and is sufficient to punish and deter the defendants from future violations of the Federal Communications Act.
Given that the plaintiff seeks a judgment against a business entity and its operator for one act, damages should be awarded jointly and severally. See, e.g., Entertainment by J J Inc. v. Medina, No. 01 Civ. 07057, 2002 U.S. Dist. LEXIS 3058, at *8-9, 2002 WL 273306, at *3 (S.D.N.Y. Feb. 26, 2002).
Enhanced Damages
The plaintiff seeks enhanced damages, in the amount of $100,000, from the defendants. "In any case in which the court finds that the violation was committed willfully and for purposes of direct or indirect commercial advantage or private financial gain, the court in its discretion may increase the award of damages, whether actual or statutory, by an amount of not more than $100,000 for each violation of subsection (a) of this section." See 47 U.S.C. § 605(e)(3)(C)(ii).
The defendants' determination, to broadcast a closed-circuit cable program without having received prior authorization to do so, demonstrates their conduct was willfull. See Ruiz, 2005 U.S. Dist. LEXIS 3856, at *4, 2005 WL 589403, at *2 (finding it unlikely the defendants gained access to the program accidentally, since they were not authorized to broadcast it); see also Time Warner Cable of New York City v. Googies Luncheonette, Inc., 77 F. Supp. 2d 485, 490 (S.D.N.Y. 1999) (noting "[s]ignals do not descramble spontaneously, nor do television sets connect themselves to cable distribution systems"). Moreover, it is reasonable to conclude the persons present at Nelly Restaurant, during the early morning hours of November 28, 2004, were attracted to the establishment for the purpose of viewing the Program. This is enough to meet the private financial gain requirement for awarding enhanced damages. See J J Sports, 2007 WL 294101, at *3 (awarding $2,000 in enhanced damages despite a lack of evidence that the defendants advertised the unauthorized programming, profited from food or drink sales, or imposed a cover charge, since the defendants presumably exhibited the program to attract customers or promote community goodwill).
Based on the above, the Court finds that an award to the plaintiff of enhanced damages in the amount of $2,000 is warranted. See id.
Attorney's Fees and Costs
47 U.S.C. § 605 requires a court to "direct the recovery of full costs, including awarding reasonable attorneys' fees to an aggrieved party who prevails." See 47 U.S.C. § 605(e)(3)(B)(iii).
When fixing an appropriate amount to be awarded for attorney's fees, the Second Circuit Court of Appeals requires that the "presumptively reasonable fee" method be employed. Arbor Hill Concerned Citizens Neighborhood Ass'n v. County of Albany, 522 F.3d 182, 190 (2d Cir. 2008). While "exercising its considerable discretion," a court should assess "all of the case-specific variables that [the Second Circuit] and other courts have identified as relevant to the reasonableness of attorney's fees," in order to determine what constitutes a presumptively reasonable fee. Id. (discussing "case-specific variables"). In assessing the reasonableness of attorneys' fees under this standard, a court must analyze the party's evidence to determine whether the "requested rates are in line with those prevailing in the community for similar services by lawyers of reasonably comparable skill, experience, and reputation." Blum v. Stenson, 465 U.S. 886, 896 n. 11, 104 S. Ct. 1541, 1547 n. 11 (1984).
A party seeking an award of attorney's fees must support that request with contemporaneous time records that show, "for each attorney, the date, the hours expended, and the nature of the work done." New York State Ass'n for Retarded Children, Inc. v. Carey, 711 F.2d 1136, 1154 (2d Cir. 1983). Attorney's fee applications that do not contain such supporting data "should normally be disallowed." Id. at 1154.
In prosecuting this action, Garden City engaged the service of the law firm Lonstein Law Office, P.C., and, Julie Cohen Lonstein, Esq. ("Lonstein"), an attorney with that firm, submitted an affidavit to the Court setting forth: (a) the number of hours an attorney and paralegal devoted to this action, as well as the nature of the work they performed; and (b) their hourly rates. In her affidavit, Lonstein states that she is "the attorney" for Garden City. Contemporaneous time records were also submitted to the Court, which indicate that the plaintiff incurred attorney's fees for 4.87 hours of work performed by an attorney, at an hourly rate of $200, and for 2.50 hours of work performed by a paralegal, at an hourly rate of $75.00.
Based upon the factors identified in Arbor Hill, which the Court has considered, the Court's review of the submissions made by Garden City, which identify the services performed by counsel and support staff, the Court's understanding of hourly rates charged by private law firms in the community, and the Court's understanding that corporate clients, like the plaintiff, often negotiate with their attorneys to pay the lowest fee necessary to litigate their case effectively, see Arbor Hill, 522 F.3d at 190, the Court finds that: (1) the above-noted hourly rates are reasonable; and (2) $1,161.50 in attorney's fees were reasonably incurred by Garden City in prosecuting this action against Lopez and Nelly Restaurant. Accordingly, granting the plaintiff's requested award for attorney's fees is appropriate. The plaintiff also seeks to recover $450.00 in costs, based on $250.00 in filing fees and $200.00 it expended serving the defendants. This request is reasonable.
RECOMMENDATION
For the reasons stated above, it is recommended that the plaintiff be awarded $3,000.00 against the defendants, jointly and severally. I recommend further that the plaintiff recover attorney's fees, in the amount of $1,161.50, and costs, in the amount of $450.00, from the defendants. Post-judgment interest should be awarded to Garden City in an amount to be calculated by the Clerk of Court, pursuant to 28 U.S.C. § 1961(a).
* * *
Plaintiff is directed to serve a copy of this Report and Recommendation upon the defendants and file proof of service with the Clerk of Court.
FILING OF OBJECTIONS TO THIS REPORT AND RECOMMENDATION
Pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure, the parties shall have fourteen (14) days from receipt of this Report to file written objections. See also Fed.R.Civ.P. 6. Such objections, and any responses to objections, shall be filed with the Clerk of Court, with courtesy copies delivered to the chambers of the Honorable Barbara S. Jones, 500 Pearl Street, Room 1920, New York, New York, 10007, and to the chambers of the undersigned, 40 Foley Square, Room 540, New York, New York, 10007. Any requests for an extension of time for filing objections must be directed to Judge Jones. FAILURE TO FILE OBJECTIONS WITHIN FOURTEEN (14) DAYS WILL RESULT IN A WAIVER OF OBJECTIONS AND WILL PRECLUDE APPELLATE REVIEW. See Thomas v. Am, 474 U.S. 140 (1985); IUE AFL-CIO Pension Fund v. Herrmann, 9 F.3d 1049, 1054 (2d Cir. 1993); Frank v. Johnson, 968 F.2d 298, 300 (2d Cir. 1992);Wesolek v. Canadair Ltd., 838 F.2d 55, 57-59 (2d Cir. 1988); McCarthy v. Manson, 714 F.2d 234, 237-38 (2d Cir. 1983).