Opinion
IP 01-758-C M/S
September 18, 2002
ORDER ON PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT
This matter is before the Court on plaintiff's, National Satellite Sports, Inc. ("NSS"), Motion for Summary Judgment on its claims under the Communications Act of 1934 (the "Act"), 47 U.S.C. § 553 and § 605, against defendants, Ditt's Pittsboro Pub, Inc. ("Ditt's"), and Kyle Scott Dittemore. The parties have fully briefed their arguments, and the motion is now ripe for ruling.
NSS sues both Ditt's Pittsboro Pub, Inc., and Kyle Scott Dittemore, the president and sole shareholder of Ditt's. However, as defendant points out, Ditt's is a corporation existing under the laws of the State of Indiana, and shareholders are not personally liable for the debts of the corporation. Thus, Dittemore will not be personally liable for this judgment unless this is a situation where "piercing the corporate veil" is appropriate.
I. FACTUAL BACKGROUND
The facts in the light most favorable to Ditt's follow. NSS is a Florida corporation with its principal offices in Boca Raton, Florida. Pl.'s Stmt. of Facts ¶ 1. Ditt's is an Indiana corporation with its principal offices in Pittsboro, Indiana. Id. ¶ 2. Kyle Scott Dittemore is the president of Ditt's and its sole shareholder. Dittemore Aff. ¶¶ 2-3.
NSS entered into a closed-circuit television license agreement to exhibit the closed-circuit telecast of the April 29, 2000, Championship boxing match between Lennox Lewis and Michael Grant in New York City, New York, including undercard and preliminary bouts (the boxing match and all related bouts are collectively referred to as the "Event"), at closed-circuit locations such as theaters, arenas, bars, clubs, lounges, and restaurants throughout Indiana. Pl.'s Stmt. of Facts ¶ 4. NSS entered into a License Agreement for the purpose of distributing for commercial gain the closed-circuit broadcast of the Event to various business establishments throughout Indiana. Id. ¶ 5. The closed-circuit broadcast of the Event was not included for the use of the general public. Id. ¶ 6. Pursuant to the License Agreement, NSS marketed and distributed the closed-circuit rights granted to it. Id. ¶ 7. NSS contracted with various establishments throughout Indiana and granted to such establishments the right to broadcast the Event for a fee. Id. The transmission of the event was electronically coded, or "scrambled." Id. ¶ 8. In order for the signal to be received and telecast clearly, it had to be decoded with electronic decoding equipment. Id.
The transmission of the Event was available to the defendants for purchase to broadcast at Ditt's. Id. ¶ 9. Had the defendants contracted with NSS, they would have been authorized to receive, transmit, and publish the Event at Ditt's. Id. Ditt's did not, however, contract with NSS to obtain the rights to broadcast the Event. Id. The establishments which contracted with NSS to broadcast the Event were provided with the electronic decoding equipment and satellite coordinates necessary to receive the signal of the Event. Id. ¶ 10.
Despite Ditt's not entering into a contract with NSS for the broadcast rights of the Event, the Event was, in fact, broadcast for the patrons at Ditt's on April 29, 2000. Id. ¶ 11. Ditt's did not pay for the broadcast of the Event. Id. ¶ 12. Ditt's was not otherwise authorized by NSS to intercept, transmit, and broadcast the Event. Id. ¶ 15.
Kevin Sanford ("Sanford") was a bartender at Ditt's on April 29, 2000. Dittemore Aff. ¶ 4. At that time, Sanford's apartment was above and to the side of Ditt's. Andreanopoulos Aff. ¶ 4. Prior to April 29, 2000, Tim Andreanopoulos ("Andreanopoulos"), the owner of Magic Satellite, was contacted by Sanford to move his Direct T.V. satellite from a previous residence to Sanford's residence next to Ditt's. Id. ¶ 3. Andreanopoulos completed the installation of the Direct T.V. at Sanford's apartment. Id. According to Andreanopoulos, Sanford paid for the Event for his personal use. Id. Andreanopoulous also stated that Ditt's Pub and Sanford's residence shared the same "splitter box" outside of Ditt's. Id. ¶ 13. Thus, according to Andreanopoulos, it would have been possible for Sanford to have later run the cable connection from the "splitter box" to the Ditt's Pub television to view the Event there. Id.
Andreanopoulos also stated that Magic Satellite's office was located next door to Ditt's in April of 2000. Id. ¶ 8. Andreanopoulos did not observe any promotion of Direct T.V. service, or pay for view features at the bar at that time, and satellite service was never installed in Ditt's Pub. Id. ¶¶ 7-8.
According to Dittemore, Sanford was not authorized to transmit the Event at Ditt's on April 29, 2000, and the transmission of the event was not advertised or publicized. Dittemore Aff. ¶¶ 7-8. Dittemore had no knowledge of the transmission until sometime after April 29, 2000, and Sanford was discharged from his employment after Dittemore became aware of the transmission. Id. ¶¶ 10-11.
In support of its Motion for Summary Judgment, plaintiff has submitted the affidavit of Andrew Zeunik ("Zeunik") of Indy Confidential, Inc. Ex. A. Zeunik states in his affidavit that he was present at Ditt's Pub on April 29, 2000, and that he observed the Event being broadcast on a big screen television. Id. The Event was in the second round of the Lennox Lewis/Michael Grant bout when Zeunik was present. Id. There was not a cover or admission charge that night, nor did Zeunik observe any advertising for the broadcast of the Event. Id.
II. SUMMARY JUDGMENT STANDARDS
As stated by the Supreme Court, summary judgment is not a disfavored procedural shortcut, but rather is an integral part of the federal rules as a whole, which are designed to secure the just, speedy, and inexpensive determination of every action. See Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986). See also United Ass'n of Black Landscapers v. City of Milwaukee, 916 F.2d 1261, 1267-68 (7th Cir. 1990), cert. denied, 111 S.Ct. 1317 (1991). Motions for summary judgment are governed by Rule 56(c) of the Federal Rules of Civil Procedure, which provides in relevant part:
The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.
Once a party has made a properly-supported motion for summary judgment, the opposing party may not simply rest upon the pleadings but must instead submit evidentiary materials which "set forth specific facts showing that there is a genuine issue for trial." FED. R. CIV. P. 56(e). A genuine issue of material fact exists whenever "there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). The nonmoving party bears the burden of demonstrating that such a genuine issue of material fact exists. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986); Oliver v. Oshkosh Truck Corp., 96 F.3d 992, 997 (7th Cir. 1996), cert. denied, 520 U.S. 1116 (1997). It is not the duty of the Court to scour the record in search of evidence to defeat a motion for summary judgment; rather, the nonmoving party bears the responsibility of identifying the evidence upon which she relies. See Bombard v. Fort Wayne Newspapers, Inc., 92 F.3d 560, 562 (7th Cir. 1996). When the moving party has met the standard of Rule 56, summary judgment is mandatory. See Celotex, 477 U.S. at 322-23; Shields Enters., Inc. v. First Chi. Corp., 975 F.2d 1290, 1294 (7th Cir. 1992).
In evaluating a motion for summary judgment, the Court should draw all reasonable inferences from undisputed facts in favor of the nonmoving party and should view the disputed evidence in the light most favorable to the nonmoving party. See Estate of Cole v. Fromm, 94 F.3d 254, 257 (7th Cir. 1996), cert. denied, 519 U.S. 1109 (1997). The mere existence of a factual dispute, by itself, is not sufficient to bar summary judgment. Only factual disputes that might affect the outcome of the suit in light of the substantive law will preclude summary judgment. See Anderson, 477 U.S. at 248; JPM Inc. v. John Deere Indus. Equip. Co., 94 F.3d 270, 273 (7th Cir. 1996). Irrelevant or unnecessary facts do not deter summary judgment, even when in dispute. See Clifton v. Schafer, 969 F.2d 278, 281 (7th Cir. 1992). "If the nonmoving party fails to establish the existence of an element essential to [her] case, one on which [she] would bear the burden of proof at trial, summary judgment must be granted to the moving party." Ortiz v. John O. Butler Co., 94 F.3d 1121, 1124 (7th Cir. 1996), cert. denied, 519 U.S. 1115 (1997).
III. DISCUSSION A. AGENCY LAW
NSS asserts that Ditt's violated § 553 and § 605 of the Communications Act. In opposition to plaintiff's arguments, Ditt's does not dispute that the Event was being broadcast to the patrons of Ditt's Pittsboro Pub on April 29, 2000, and that Ditt's did not pay NSS for the Event. Instead, Ditt's argues that principles of agency law must be addressed before the corporation can be found liable.
Ditt's claims that Sanford was acting without authorization from Dittemore or Ditt's, and thus the principal is not liable because the agent (Sanford) was not acting within the scope of his authority. Further, because Sanford was fired subsequent to the broadcast of the Event, the authority was not ratified.
Ditt's cites the following quote from Moore v. Hosier, 43 F. Supp.2d 978 (N.D.Ind. 1998) in support of his agency argument: "an employer is generally not vicariously liable for the wrongful act when the employee committed it of his own volition and evidenced `no intention to perform it as part of or incident to the service for which he is employed . . .'" Id. at 989 (citation omitted). Ditt's, however, did not include the next sentence from Moore, which adds, "[h]owever, an employee's wrongful act may still fall within the scope of his employment if his purpose was, to an appreciable extent, to further his employer's business, even if the act was predominately motivated by an intention to benefit the employee himself." Id. The bouts were on the big screen in the bar, and Ditt's does not dispute that food and drinks were sold during the broadcast. Thus, even if Sanford was, as Ditt's argues, predominantly motivated by an intention to benefit himself because he did not want to miss the Event, the act of transmitting the Event still falls within the scope of his employment because broadcasting it to the patrons of Ditt's would clearly further his employer's business. The Court concludes that defendant's agency defense is without merit.
B. FEDERAL COMMUNICATIONS ACT
NSS contends that Ditt's violated both § 553 and § 605 of the Act and seeks statutory damages pursuant to both sections. However, in United States v. Norris, the Seventh Circuit held that § 605 was intended "to apply to the unlawful interception of cable programming transmitted through the air, while it intended for § 553 to apply to the unlawful interception of cable programming while it is actually being transmitted over a cable system." United States v. Norris, 88 F.3d 462, 469 (7th Cir. 1996). "Basically this means that § 605 no longer applies once the radio communication reaches the cable." That's Entm't v. Anciano's, Inc., 1996 WL 467224, at *2 (N.D. Ill.). See also Gen. Instrument Corp. of Del. v. Nu-Tek Elecs. Mfg., Inc., 1996 WL 402511, at *6 (E.D.Pa. 1996) ("[I]f one steals communications out of the air, Section 605 applies. But once the communications are on the wire or cable, Section 605 does not apply.").
Plaintiff's submissions do not make entirely clear whether it contends that Ditt's intercepted its satellite transmission from the air (conduct that would be actionable under § 605), or whether it contends instead that Ditt's, through its agent Sanford, received the satellite transmission at Sanford's nearby residence, and then ran a cable line from the "splitter box" to the Pub (conduct that would be actionable under § 553). The only record evidence on how the interception occurred is the Andreanopoulos affidavit, and based on this affidavit, Ditt's contends that the interception occurred via the cable line from the "splitter box." See Andreanopoulos Aff. ¶¶ 10-13. Because the plaintiff did not offer any evidence on how the interception took place or contest Ditt's "splitter box" theory, the Court will analyze the claim as a § 553 violation.
Section 553(a)(1) of Title 47 of the United States Code provides:
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.47 U.S.C. § 553(a)(1). Even if Sanford paid for the Event for his personal use, Ditt's still has violated the Act because it, acting through its agent Sanford, clearly was not authorized to then broadcast the Event to the patrons of a commercial establishment. Moreover, Ditt's admits that there was an "interception" as defined by the Act, but simply attempts to shift the blame for the "interception" to Sanford. Because this Court previously rejected the agency argument, and because there was an unauthorized interception by means of a cable or wire, the Court concludes that Ditt's violated 47 U.S.C. § 553(a)(1). The Court GRANTS plaintiff's Motion for Summary Judgment with respect to 47 U.S.C. § 553, and DENIES plaintiff's Motion for Summary Judgment with respect to 47 U.S.C. § 605.
Arguably Ditt's did not "intercept" the transmission because he contracted to have the communication arrive at his apartment and it arrived there. Regardless, Ditt's did "receive" the transmission, and the receipt was unauthorized.
C. DAMAGES
A plaintiff invoking the Act may plead and attempt to prove actual damages or, as NSS does in the case at bar, opt for statutory damages. § 553(c)(A)(ii) provides that a party aggrieved "may recover an award of statutory damages for all violations involved in the action, in a sum of not less than $250 or more than $10,000 as the court considers just." § 553(c)(3)(B) provides that if the violation was willful, the court has discretion to increase the damages by up to $50,000. § 553(c)(2) provides that "the court may . . . direct the recovery of full costs, including awarding reasonable attorneys' fees to an aggrieved party who prevails."
NSS proposes that the Court award the statutory maximum under § 553: statutory damages of $10,000 under § 553(3)(A)(ii); the maximum $50,000 increase for a willful violation pursuant to § 553(3)(B); and costs, including reasonable attorneys' fees. The total would be $60,000, plus costs.
NSS submitted the affidavit of Skip Klauber ("Klauber") on the issue of damages. Klauber states that NSS suffered damage to its goodwill and reputation, and that commercial establishments like Ditt's would have to pay a sublicense fee based on the capacity of the establishment to broadcast the Event. Klauber Aff. ¶¶ 7, 13. "For example, if an establishment has a maximum fire code occupancy of 150 persons, the fee would have been $3,000." Id. ¶ 7. Although it is helpful to know how NSS calculates its fees, no evidence has been submitted on the maximum fire code occupancy of Ditt's. In the absence of such evidence, some courts have made rough estimates of the benefit to the defendant based on the number of patrons present in the bar on the night in question. See e.g., That's Entm't, Inc. v. Old Bridge Tavern, 1996 WL 148045, at *3 (N.D.Ill.) (calculating damages by multiplying $55 times the number of patrons counted in the bar on the night of broadcast); Cablevision Sys. Corp. v. Midland Enter., Inc., 858 F. Supp. 42, 45 (S.D.N.Y. 1994) (calculating damages on the basis of $50 per person). However, Andrew Zeunik's affidavit, which states that Zeunik was present during the second round of the Lewis fight, does not provide any count of the patrons in the bar. Moreover, NSS requests an award of reasonable attorneys' fees and costs, but has not submitted any evidence of costs incurred. Thus, this Court orders a hearing on the issue of damages in order to fashion an appropriate damage award for a violation of § 553 of Title 47.
Zeunik does state that no cover or admission fee was charged on April 29, 2000, and that he did not observe any advertisements or promotions of the broadcast of the Event. See Ex. A. These factors weigh against a finding of willfulness.
IV. CONCLUSION
For the reasons discussed herein, the Court finds that defendant has failed to demonstrate that a genuine issue of material fact exists in this case. The Court DENIES plaintiff's Motion for Summary Judgment on liability under 47 U.S.C. § 605. The Court GRANTS plaintiff's Motion for Summary Judgment on liability under 47 U.S.C. § 553. Finally, the Court orders a hearing on the issue of damages on Thursday, October 3, 2002, at 9:00 a.m. in Courtroom 202.