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denying request for costs where "plaintiff has submitted no documentary evidence in support of its request . . ."
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06-CV-00617 (RJD) (KAM).
March 16, 2007
REPORT AND RECOMMENDATION
By order dated April 19, 2006, United States District Judge Raymond J. Dearie dismissed this action against Cama Fe Restaurant Corp. and Martha M. Rosado. By order dated June 1, 2006, Judge Dearie referred this matter, pursuant to 28 U.S.C. § 636(b), to the undersigned for an inquest on damages, following a motion by plaintiff on May 2, 2006 for entry of default judgment against defendants Castillo Restaurant Corp., Nelly Pena, Canario Restaurant LLC, Jose A. Pimentel, Los Mellizos Bar Restaurant Corp., and Jaime G. Huiracocha. Plaintiff subsequently dismissed its action against all of the defendants except Canario Restaurant LLC and Jose A. Pimentel (see docket no. 16, 6/29/06 Ltr. from Pltf), and filed this revised motion for default judgment on November 3, 2006 against Canario Restaurant LLC and Jose A. Pimentel for alleged violations of the Cable Communications Act of 1934, codified as amended at 47 U.S.C. §§ 553, 605(a) and 605(e)(4). Plaintiff's motion for default judgment alleges that Canario Restaurant LLC and Pimentel illegally intercepted and broadcasted the October 2, 2004 closed-circuit broadcast of a boxing match between Felix Trinidad and Ricardo Mayorga (the "Trinidad/Mayorga match" or the "Event") and seeks statutory damages against the defendants of up to $10,000 for each violation, as well as additional damages for willful violations of up to $100,000 per violation. Plaintiff also seeks attorney's fees and costs. Defendants have not submitted any opposition to plaintiff's motion, despite receiving notice and an opportunity to do so. (See docket no. 18, Affidavit of Service.)
For the reasons set forth below, it is respectfully recommended that a default judgment be entered against defendants Canario Restaurant LLC and Jose A. Pimentel in the total amount of $4,550 inclusive of basic and enhanced statutory damages of $4,000 and attorneys fees of $550.
I. BACKGROUND
According to the complaint, plaintiff Kingvision Pay-Per-View, Ltd. ("Kingvision") held a license to market and distribute to various establishments throughout New York the closed-circuit broadcast of the Trinidad/Mayorga match, scheduled for October 2, 2004. (Docket no. 1, Complaint ("Compl.") ¶ 13.) The closed-circuit broadcast was only available to establishments that paid a sublicensing fee and were contractually authorized by Kingvision. (Compl. ¶ 15; docket no. 19, Plaintiff's Affidavit in Support of Default Judgment ("Corwin Aff.") ¶ 7.) The transmission of the Event was coded or scrambled, requiring electronic decoding equipment for clear reception and viewing. (Compl. ¶ 17.) Only those establishments that plaintiff authorized to receive and exhibit the Event were provided with such electronic decoding capability and/or the satellite coordinates necessary to receive the signal. (Corwin Aff. ¶ 6.)
On October 2, 2004, the night of the Event, plaintiff dispatched an investigator who observed the Event being telecast to the patrons of the Canario Restaurant at 1062 Broadway, Brooklyn, New York (the "Establishment"). (Id. ¶ 8.) Investigator Gerard A. Carita entered the Establishment at approximately 11:24 p.m., and observed the Event being exhibited on one television set to at least 20 patrons. (Docket no. 20, Affidavit of Gerard A. Carita dated October 14, 2004 ("Carita Aff.").)
Plaintiff claims that defendants "could not have obtained the transmission of the Event had they not undertaken specific wrongful actions to intercept, receive and/or exhibit the Telecast." (Corwin Aff. ¶ 9.) Accordingly, plaintiff alleges that defendants willfully "intercepted and received or assisted in the interception and receipt of the transmission" of the Event for the purpose of private commercial gain. (Corwin Aff. ¶¶ 8, 14.)
II. DISCUSSION
A. Default Judgment
Rule 55(b) of the Federal Rules of Civil Procedure provides that when a party moves for judgment against an adverse party who has failed to answer or otherwise appear in the action, the Court may enter judgment against the defaulting party. When a default judgment is entered, the defendant's failure to respond constitutes an admission of the well-pleaded factual allegations in the complaint, except for claims relating to damages. See Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992); Au Bon Pain Corp. v. Artect, Inc., 653 F.2d 61, 65 (2d Cir. 1981). Moreover, an inquest by affidavit, without an in-person hearing, may be conducted as long as the court can ensure "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. ContiCommodity Svcs., Inc., 873 F.2d 38, 40 (2d Cir. 1989)). Thus, the movant need only show adequate support for the relief it seeks. Greyhound, 973 F.2d at 158-59.
As noted above, plaintiff's complaint invokes both 47 U.S.C. §§ 553 and 605 as bases for relief. Sections 553 and 605 apply, respectively, to cable and radio communications, but both provisions may apply where a cable-borne transmission originates as a radio transmission. Section 553(a)(1) provides that:
No person shall intercept or receive or assist in intercepting or receiving 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.
Section 605(a) provides that:
No 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. No person not being entitled thereto shall receive or assist in receiving any interstate or foreign communication by radio and use such communication (or any information therein contained) for his own benefit or for the benefit of another not entitled thereto.
Section 605(a) applies to "the interception of cable-borne . . . pay television where cable-borne transmissions originate as satellite transmissions." Kingsvision Pay-Per-View Corp., Ltd. v. Keane, No. 02 Civ. 5173, 2006 WL 1704474, at *3 (E.D.N.Y. June 16, 2006) (quoting Int'l Cablevision, Inc. v. Sykes, 75 F.3d 123, 130 (2d Cir. 1996) (internal quotations omitted)). Thus, both statutes apply when television programming is transmitted via both cable and satellite. Sykes, 75 F.3d at 129.
Plaintiff's complaint appears to establish the elements of liability required to state claims under both sections 553(a)(1) and 605(a). As described above, plaintiff has alleged that defendants could not have obtained transmission of the Event without performing one of several illegal acts to intercept plaintiff's cable or satellite transmissions. To the extent that the defendants intercepted or received services at the point that they were distributed via cable, defendants' acts constitute a violation of section 553(a). In addition, by intercepting and divulging the Event, which was conveyed via interstate satellite transmission (Compl. ¶ 12) and thus protected under section 605(a) as a radio communication, defendants also violated section 605(a). See, e.g., Keane, 2006 WL 1704474, at *3 (finding violations of sections 553 and 605 when business entity intercepted and received satellite transmissions of a boxing match without authorization).
Plaintiff has moved for default judgment and defendants have failed to respond to the Complaint or oppose plaintiff's motion for default judgment. Given defendants' opportunity to respond and their apparent lack of interest in participating in these proceedings, there is no reason to delay these proceedings any further. Accordingly, it is respectfully recommended that plaintiff's motion for entry of a default judgment be granted.
B. Damages
Plaintiffs who seek compensation for violations of §§ 553 and 605 may elect to seek either actual damages and lost profits or statutory damages. See Time Warner Cable v. Googies Luncheonette, Inc., 77 F. Supp. 2d 485, 489 (S.D.N.Y. 1999); Garden City Boxing Club, Inc. v. Perez, No. 05 Civ. 3713, 2006 WL 2265039, at *5 (E.D.N.Y. Aug. 8, 2006). In this case, plaintiff seeks statutory damages because actual damages are difficult to prove. (See docket no. 18, Plaintiff's Memorandum of Law ("Pl. Mem."), at 7.)
It is well-settled in the Second Circuit that a plaintiff cannot recover damages under both sections 553(a) and 605(a), and that when a defendant is liable under both sections the court should award damages pursuant to 47 U.S.C. § 605 because it provides for greater recovery. See Sykes, 75 F.3d at 127; J J, Inc. v. Mama Zee Rest. Catering Servs., No. 01 Civ. 3945, 2002 WL 2022522, at *3 (E.D.N.Y. May 21, 2002) (dual recovery under §§ 553 and 605 not permissible). Accordingly, plaintiff's request for damages will be considered only under 47 U.S.C. § 605. Unlike allegations pertaining to liability, those pertaining to damages are not deemed admitted in the context of a motion for default judgment. Greyhound, 973 F.2d at 158. Therefore, the movant must establish its entitlement to recovery. Id. As stated above, no hearing is required where a Court has determined that there is "a basis for the damages specified in the default judgment."Transatlantic Marine Claims Agency Inc., 109 F.3d 105, 111 (quoting Fustok, 873 F.2d at 40).
Title 47 U.S.C. § 605(e)(3)(C)(i)(II) allows a party to 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. . . ." In addition, section 605(e)(3)(C)(ii) provides that where "the court finds that the violation was committed willfully and for the 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). . . ."
As other courts have noted, 47 U.S.C. § 605 provides no statutory definition of the term "violation." See Garden City Boxing Club. Inc. v. Rosado, No. 05 Civ. 1037, 2005 WL 3018704, at *3 (E.D.N.Y. Oct. 6, 2005). "However, most cases applying this statute in a commercial context have interpreted the showing of an event on a single night as one violation." Perez, 2006 WL 2265039, at *5 (citing Time Warner Cable v. Taco Rapido Rest., 998 F. Supp. 107, 111 (E.D.N.Y. 1997)).
"In determining the amount of damages that can be imposed for each violation within the range of $1,000 to $10,000 per violation, Section 605 leaves the decision within the sound discretion of the court." Perez, 2006 WL 2265039, at *5 (citing Home Box Office v. Champs of New Haven, Inc., 837 F. Supp. 480, 484 (D. Conn. 1993) (reducing an award from $250,000 to $10,000 for commercial broadcast of a boxing match) and Taco Rapido Rest., 998 F. Supp. at 111). Courts in this circuit have relied upon one of two methods of calculating statutory damages in cases involving the unauthorized receipt and exhibition of pay-per-view events. See Googies Luncheonette, Inc., 77 F. Supp. 2d at 489. The first method bases the award on the number of patrons in the establishment who viewed the broadcast. See, e.g., Kingvision Pay-Per-View Ltd. v. Cardona, No. 03 Civ. 3839, 2004 WL 1490224, at *3 (S.D.N.Y. June 30, 2004) ($20 per patron); Taco Rapido Rest., 988 F. Supp. at 111 ($50 per patron); Mama Zee Rest., 2002 WL 2022522, at *4 ($50 per patron); New Contenders, Inc. v. Diaz Seafood Corp., No. 96 Civ. 4701, 1997 WL 538827, at *2 (S.D.N.Y. Sept. 2, 1997) ($300 per patron). The second method awards a flat sum for each violation. See, e.g., Entm't by J J. Inc. v. Suriel, No. 01 Civ. 11460, 2003 WL 1090268, at *1 (S.D.N.Y. March 11, 2003) (awarding a total of $11,000); Kingvision Pay-Per-View Corp., Ltd. v. Papacito Lidia Luncheonette, Inc., No. 01 Civ. 7575, 2001 WL 1558269, at *2 (S.D.N.Y. Dec. 6, 2001) (awarding $20,000);Kingvision Pay-Per-View, Ltd. v. Jasper Grocery, 152 F. Supp. 2d 438, 442-43 (S.D.N.Y. 2001) (awarding $15,000).
In cases where there is uncontradicted evidence of the number of patrons viewing the match in an establishment, courts have used the first approach and multiplied the number of patrons by a set sum, plus any cover charges or other profits attributable to the unauthorized viewing. See Googies Luncheonette, 77 F. Supp. 2d at 489; see also Cardona, 2004 WL 1490224, at *3; Time Warner Cable v. Sanchez, No. 02 Civ. 5855, 2003 WL 21744089, at *4 (S.D.N.Y. July 8, 2003). This is based on the theory that the patrons who watched the unauthorized broadcast would have ordered it individually for residential use. See Googies Luncheonette, 77 F. Supp.2d at 490.
Plaintiff seeks the maximum statutory damage award under section 605(e)(3)(C)(i)(II) in this case. (Pl. Mem. at 6.) While plaintiff bases its argument for maximum damages on the Copyright Act of 1976, 17 U.S.C. § 101, the Court declines to follow this analysis because the Cable Communications Act applies squarely to this case. (See Pl. Mem. at 8.) Furthermore, plaintiff has provided little guidance on which to base a damage calculation. Plaintiff has not submitted evidence from which the actual profits of defendants might be inferred, such as whether the establishment imposed a cover charge on the night of the broadcast. There is also no evidence that the defendants advertised or otherwise promoted the Event to entice customers into the establishment. Even though plaintiff suggests that it would have charged defendant a sublicense fee of approximately $3,000, plaintiff fails to explain how it reached this figure. (Pl. Mem. at 9.) Plaintiff notes, for example, that authorized commercial establishments which contracted with plaintiff were required to pay a sublicense fee of $20 multiplied by the maximum fire code occupancy of the commercial establishment, such that an establishment with a maximum fire code occupancy of 150 persons would have been charged $3,000. (Corwin Aff. ¶ 2.) While plaintiff states that it would have requested a sublicense fee of approximately $3,000 from the defendants (Pl. Mem. at 9), plaintiff has not alleged or submitted any evidence that the defendant Establishment had a maximum fire code occupancy of 150 persons. Plaintiff has submitted only an affidavit by its investigator that asserts that 20 or more persons were present at one point during the broadcast of the Event. (Carita Aff. at 1.)
Because "[t]he Court is hesitant to extrapolate damage awards without such actual evidence," Perez, 2006 WL 2265039, at *6, the Court applies the flat sum method of calculating plaintiff's damages. See Suriel, 2003 WL 1090268, at *1; Papacito Lidia Luncheonette, Inc., 2001 WL 1558269, at *2; Jasper Grocery, 152 F. Supp. 2d 438, 442-43. Given the lack of evidence to justify a higher award, such as allegations of multiple violations, it is respectfully recommended that plaintiff be awarded the minimum statutory damages of $1,000 provided under section 605(e)(3)(C)(i)(II).
Plaintiff also seeks enhance damages for willful violation of up to $100,000, pursuant to 47 U.S.C. § 605(e)(3)(C)(ii). (Pl. Mem. at 3.) To receive enhanced damages, plaintiff must prove that defendants' display was willful and for "purposes of direct or indirect commercial advantage or private financial gain." 47 U.S.C. § 605(e)(3)(C)(ii). Courts typically consider the following factors in determining whether a defendant's willful conduct calls for enhanced damages: "repeated violations over an extended period of time; substantial unlawful monetary gains; significant actual damages to plaintiff; defendant's advertising for the intended broadcast of the event; defendant's charging a cover charge or charging premiums for food and drinks." See Kingvision Pay-Per-View, Ltd. v. Recio, No. 02 Civ. 6583, 2003 WL 21383826, at *5 (S.D.N.Y. June 11, 2003) (internal citations omitted).
Plaintiff does not allege that defendants engaged in prior violative conduct, advertised or displayed the Trinidad/Mayorga match to entice patrons into the Establishment, imposed an admission or cover charge, or earned significant income as a result of displaying the Event. Plaintiff is nonetheless entitled to a further enhancement of the damages award because the record demonstrates that defendants affirmatively and willfully intercepted the Event for financial gain. (Compl. ¶¶ 20, 23-24.) It is clear in this case that defendants intercepted and exhibited the Event without entering into a sublicensing agreement with or paying fees to plaintiff. Thus, the defendants illegally intercepted plaintiff's broadcast transmission in order to show the Event at their establishment. Because defendants could not have inadvertently intercepted plaintiff's broadcast, the Court concludes that defendants' actions were willful.
In circumstances demonstrating such willful violation, it is appropriate to assess enhanced damages in conjunction with basic statutory damages. As some courts have observed, awarding the statutory minimum prescribed "`would not be sufficient deterrence' since the penalty would merely be `the amount that should have been paid.'" Cablevision Systems New York City Corp. v. Diaz, No. 01 Civ. 4340, 2002 WL 31045855, at *4 (S.D.N.Y. July 10, 2002) (quoting Time Warner Cable v. Domsky, No. 96 Civ. 6851, 1997 WL 33374593, at *6 (S.D.N.Y. Sept. 5, 1997)). In light of the statutory objective of deterring future violations of 47 U.S.C. § 605, coupled with defendants' willful violation of this provision, the Court finds that enhanced damages of $3,000, or three times the amount of basic statutory damages, are appropriate in this case. See e.g.,Keane, 2006 WL 1704474, at *6 (treble damages awarded for enhanced statutory damages) (citing Kingvision Pay-Per-View, Ltd. v. Body Shop, No. 00 Civ. 1089, 2002 WL 393091, at *4 (S.D.N.Y. March 13, 2002); Joe Hand Promotions, Inc. v. West, No. 99 Civ. 0983E, 2000 WL 1610666, at *2 (W.D.N.Y. Oct. 26, 2000) (where no special circumstances are shown, treble damages are a "reasonable deterrent against future violations") (internal quotations omitted)). Accordingly, it is respectfully recommended that plaintiff be awarded a total of $4,000 in statutory and enhanced damages.
C. Attorney's Fees and Costs
Plaintiff's motion requests attorney's fees in the amount of $1,050 and costs in the amount of $150. (Affidavit for Attorney's Fees ("Klass Aff.") ¶ 9; Plaintiff's Motion for Default Judgment ¶ 5(c).) An award of costs, including reasonable attorney's fees, is mandatory under 47 U.S.C. § 605. See 47 U.S.C. § 605(e)(3)(B)(iii). In the Second Circuit, a party seeking an attorney's fees award "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.'"Diaz, 2002 WL 31045855, at *5 (quoting New York. State Ass'n for Retarded Children, Inc. v. Carey, 711 F.2d 1136, 1154 (2d Cir. 1983)).
In support of plaintiff's request, plaintiff's counsel has provided records of work performed litigating the instant action. Counsel's time record reflects an expenditure of 2.2 hours of attorney time at a rate of $250 per hour. (Klass Aff. ¶ 3-4.) The Court notes that counsel has provided time records for only 2.2 hours of work, not the 4.2 hours that counsel requests in his affidavit. (Id. ¶ 9.) Consequently, counsel has provided support for only $550 in attorney's fees, not the requested $1,050 in attorney's fees. Because counsel's hourly rate is nonetheless reasonable (see Martas v. Zaro's Bake Shop, Inc., No. 98 Civ. 5895, 2002 WL 1267999, at *6 (E.D.N.Y. March 29, 2002); Wells Fargo Bank v. BrooksAmerica Mortg. Corp., No. 02 Civ. 4467, 2004 WL 2754855, at *3 (S.D.N.Y. Dec. 1, 2004)), and because the number of hours expended by counsel do not appear excessive, redundant, or otherwise unnecessary (see Hensley v. Eckerhart, 461 U.S. 424, 434 (1983)), it is respectfully recommended that plaintiff's request for attorneys' fees in the amount of $550 be granted.
The Court has examined plaintiff's request for costs and finds that plaintiff has submitted no documentary evidence in support of its request for $150 in costs. Accordingly, it is respectfully recommended that plaintiff not be awarded costs, and that the award under section 605(e)(3)(B)(iii) include only attorney's fees in the amount of $550.
D. Liability of Individual Defendant
Plaintiff's complaint names Jose A. Pimentel as an individual defendant and alleges that Pimentel is an officer, director, and/or shareholder of Canario Restaurant LLC. (See Compl. ¶ 8.) To establish a violation of 47 U.S.C. § 605(a) by an individual defendant, plaintiff must show that the individual defendant "authorized" the violations set forth in the complaint. See Kingvision Pay-Per-View Ltd. v. Olivares, No. 02 Civ. 6588, 2004 WL 744226, at *5 (S.D.N.Y. Apr. 5, 2004) (quoting Softel Inc. v. Dragon Med. Sci. Communications, 118 F.3d 955, 971 (2d Cir. 1997)). "To establish vicarious liability, . . . [plaintiff] must show that . . . [the individual defendant] 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.'" Id. (quoting Shapiro, Bernstein Co. v. H.L. Green Co., 316 F.2d 304, 307 (2d Cir. 1963)).
Assuming the truth of the undisputed allegations in the complaint, the motion for default judgment establishes the requisite control and financial interest for Pimentel. See id. (finding requisite control and financial interest where individual defendants were sole proprietor and officer, director, shareholder, and/or principal of defendant establishments). Therefore, the Court determines that Pimentel is jointly and severally liable for violations of 47 U.S.C. § 605(a), as discussed above. Accordingly, it is respectfully recommended that plaintiff's award be limited to a single recovery against both defendants, jointly and severally.
III. CONCLUSION
For the foregoing reasons, it is respectfully recommended that a default judgment be entered against defendants Canario Restaurant LLC and Jose A. Pimentel in the total amount of $4,550, inclusive of statutory and enhanced damages of $4,000 and attorney's fees of $550.
Any objections to this Report and Recommendation must be filed with United States District Judge Raymond J. Dearie within ten days of the date of its entry. Failure to object within ten days of the date of entry will preclude appellate review by the District Court. See 28 U.S.C. § 636(b)(1); Local Civil Rule 6.3;Thomas v. Arn, 474 U.S. 140 (1985); Small v. Secretary of Health and Human Servs., 892 F.2d 15 (2d Cir. 1989). Any requests for extensions of time to file objections should be made to Judge Dearie.
Plaintiff shall serve, by hand or overnight delivery, a copy of this Report and Recommendation on defendants Canario Restaurant LLC and Jose A. Pimentel no later than January 18, 2007, and file an affidavit demonstrating service thereof by January 18, 2007.
SO ORDERED.
Dated: January 16, 2007 Brooklyn, New York