02 Civ. 5855 (GBD)(FM).
July 8, 2003.
REPORT AND RECOMMENDATION TO THE HONORABLE GEORGE B. DANIELS
In this action, plaintiff Time Warner Cable of New York City, a division of Time Warner Entertainment Co., L.P. ("Time Warner"), alleges that defendant Yndiana Molina Sanchez, doing business as El Valle Restaurant ("Sanchez"), illegally intercepted cable television programming signals, in violation of the Cable Communications Policy Act ("Communications Act"), 47 U.S.C. § 553(a)(1) and 605(a). Following Sanchez's failure to answer or otherwise respond to the complaint, Your Honor entered a Default Judgment against Sanchez and referred the matter to me to conduct an inquest regarding the damages, if any, to be awarded to Time Warner. (Docket Nos. 7, 8).
By order dated February 20, 2003, I directed Time Warner to serve and file an inquest memorandum, accompanied by supporting affidavits and exhibits, setting forth its proof of damages, including the costs of this action, and, if applicable, its attorneys' fees, and proposed findings of fact and conclusions of law. (Docket No. 9). Thereafter, the court received Time Warner's papers on March 28, 2003. (Docket No. 10). The copy of my order sent to Sanchez at her business address was returned unopened, with an indication that there was "No Such Number" on Sherman Avenue; a second copy sent by certified mail to Sanchez individually was returned "unclaimed." Subsequently, however, I discovered that the order sent to Sanchez's business had been improperly addressed.
On June 2, 2003, a supplemental order requiring Sanchez's response by June 23, 2003, was sent to Sanchez's house and her correct business address. (See Docket No. 11). The copy sent to her business was returned with a stamp indicating "attempted not known." The copy sent to Sanchez's home address apparently was delivered, but Sanchez failed to respond as directed on or before June 23, 2003.
For the reasons set forth below, I now recommend that Time Warner be awarded judgment in the amount of $8,627.50, consisting of statutory damages in the amount of $6,000, attorneys' fees in the amount of $2,477.50, and costs in the amount of $150.
II. Standard of Review
In light of Sanchez's default, Time Warner's well-pleaded allegations concerning issues other than damages 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 New York City v. Barnes, 13 F. Supp.2d 543, 547 (S.D.N.Y. 1998); Cablevision Sys. New York City Corp. v. Lokshin, 980 F. Supp. 107, 111 (E.D.N.Y. 1997).
Additionally, although a plaintiff seeking to recover damages against a defaulting defendant must prove its claim through the submission of evidence, the Court need not hold a hearing as long as it has (i) determined the proper rule for calculating damages on the claim, see Credit Lyonnais Secs. (USA), Inc. v. Alcantara, 183 F.3d 151, 155 (2d Cir. 1999), and (ii) the plaintiff's evidence establishes, with reasonable certainty, the basis for the damages specified in the default judgment. See Transatlantic Marine Claims Agency. Inc. v. Ace Shipping Corp., 109 F.3d 105, 111 (2d Cir. 1997); Fustok v. ContiCommodity Servs., Inc., 873 F.2d 38, 40 (2d Cir. 1989);see also Tamarin v. Adam Caterers, Inc., 13 F.3d 51, 53-54 (2d Cir. 1993) (inquest without hearing improper when damages are based upon "single affidavit only partially based upon real numbers").
On the basis of the complaint and Time Warner's inquest papers, I find that the facts are as follows:
Time Warner is a division of Time Warner Entertainment Company, L.P., a Delaware limited partnership, with its principal place of business in New York, New York. (Compl. ¶ 4). Defendant Sanchez operated a business at 263 Sherman Avenue, New York, New York 10034. (Id. ¶ 5).
Although a division of a corporation is not a separate entity, it is appropriate to treat the division and its parent as a single entity. See, e.g., In re Sugar Indus. Antitrust Litig., 579 F.2d 13, 18-19 (3d Cir. 1978).
Time Warner operates its cable television systems pursuant to franchises awarded to it by the City of New York that authorize Time Warner to construct, operate, and maintain cable television systems in Queens, Kings, and New York Counties.(Id. ¶ 6). Time Warner's cable television services include "Basic" and "Standard" programming packages, and premium programing services, such as Cinemax, Home Box Office, and Showtime. (Id. ¶¶ 6-7). Only two of these offerings are implicated in this case. First, the monthly fee for Standard service at a commercial establishment is approximately $75 per month. (Affidavit of Thomas Allen, sworn to on March 21, 2003 ("Thomas Aff."), ¶ 3). Second, Time Warner's pay-per-view offerings, which consist of movies, sporting events, or other entertainment, is available for an additional per event fee, ranging from $4 to $39.99. (Compl. ¶¶ 8, 15).
For nearly all its cable television services, Time Warner transmits signals from orbiting satellites and other means of over-the-air radio communication to reception facilities. Time Warner then retransmits the signals to its subscribers' homes through a system of cable wiring and equipment. (Id. ¶ 10). To prevent non-subscribing individuals and commercial establishments from accessing its services, Time Warner encodes or "scrambles" these signals and provides its subscribers with a device known as a "converter" for Basic or Standard services and a "descrambler" or "decoder" for other programming services. (Id. ¶¶ 10-11).
In May 2001, Time Warner retained ACI Investigations, Inc. ("ACI"), a private investigation firm, to investigate Sanchez when it learned that the El Valle Restaurant might be making a pay-per-view boxing match between Trinidad and Joppy (the "Event") available to its customers. (See Thomas Aff. ¶ 9). On May 12, 2001, two ACI investigators went to the El Valle Restaurant, where they observed the boxing match being displayed on a single television. (See Affidavit of Joseph Allen, sworn to on March 20, 2003 ("Joseph Aff."), ¶ 3). At the time, there were two employees and approximately thirty patrons in the restaurant. (Id.). Neither Sanchez nor the El Valle Restaurant were authorized to receive any of Time Warner's programming at the Sherman Avenue address. (See Thomas Aff. ¶ 12).
A. Damages Under The Communications Act
Section 553 and 605 of Title 47 of the United States Code both prohibit the unauthorized interception and reception of cable programming services. See Int'l Cablevision. Inc. v. Sykes, 75 F.3d 123, 133 (2d Cir. 1996).See also Lokshin, 980 F. Supp. at 112 (quoting Sykes, 75 F.3d at 130) ("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.").
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 only one of those sections. Int'l Cablevision, Inc. v. Sykes, 997 F.2d 998, 1008 (2d Cir. 1993). See also Sykes, 75 F.3d at 127; Time Warner Cable of New York City v. U.S. Cable T.V., Inc, 920 F. Supp. 321, 329 (E.D.N.Y. 1996); Barnes, 13 F. Supp.2d at 548. A plaintiff may, however, elect to recover damages under Section 605 in consideration of a higher damages award. Barnes, 13 F. Supp.2d at 548.
In this case, the Time Warner programming that Sanchez intercepted was sent to Time Warner via over-the-air transmissions and then retransmitted to its customers through its cable wiring. (See Thomas Aff. ¶ 7). Accordingly, Sanchez violated both Sections 605(a) and 553(a)(1) of the Communications Act by displaying the Event without Time Warner's authorization. (See Joseph Aff. ¶ 3; Thomas Aff. ¶ 12).
Time Warner has elected to recover damages under Section 605, which provides for higher statutory damages. (See Time Warner's Proposed Findings Of Fact and Conclusions Of Law ¶ 21;see also 47 U.S.C. § 605(e)(3)(C)(i)(I)). Under Section 605(e)(3)(C)(i)(II), Time Warner is entitled to recover damages for "each violation of subsection (a) of this section . . . in a sum of not less than $1,000 or more than $10,000, as the court considers just. . . ." Additionally, if a court finds that the statute was violated "willfully and for the purpose of commercial advantage or private financial gain," it may, in its discretion, award an additional sum of up to $100,000. 47 U.S.C. § 605(e)(3)(C)(ii). In its papers, Time Warner seeks statutory damages in the amount of $10,000, plus enhanced damages of $5,000. (Time Warner's Proposed Findings Of Fact And Conclusions Of Law ¶ 24).
The amount of damages to be assessed pursuant to Section 605 rests within the sound discretion of the Court. See Home Box Office v. Champs of New Haven, Inc., 837 F. Supp. 480, 484 (Conn. 1993); Entertainment by JJ, Inc. v. Mama Zee Restaurant Catering Services. Inc., 2002 WL 2022522, at *3 (E.D.N.Y. May 21, 2002). Because the statute provides little guidance on how damages should be assessed, in circumstances such as those presented here some courts have calculated statutory damages based on the number of patrons in the establishment at the time of the violation. See, e.g., Entertainment by JJ, Inc., v. Friends II, Inc., 2003 WL 1990414 at *3 (S.D.N.Y. Apr. 25, 2003) (awarding $20 per patron, based on sublicensing fee per potential patron); Entertainment by JJ, Inc. v. Nina's Restaurant and Catering, 2002 WL 1000286, at *3 (S.D.N.Y. May 9, 2002) (awarding $20 per patron);Time Warner Cable of New York City v. Googies Luncheonette, Inc., 77 F. Supp.2d 485, 490 (S.D.N.Y. 1999) (awarding $50 per patron). Other courts have simply imposed damages in a flat amount. See, e.g., Entertainment by JJ, Inc. v. Suriel, 2003 WL 1090268, at *1 (S.D.N.Y. March 11, 2003) (awarding $11,000); King Vision Pay-Per-View Corp. v. Papacito Lidia Luncheonette. Inc., 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 (S.D.N.Y. 2001) (awarding total damages in the amount of $15,000).
Although Time Warner surmises that Sanchez may have tapped Time Warner's cable signal by "cutting Time Warner's wiring and then attaching another wire to the Time Warner wire," (see Thomas Aff. ¶ 12), it has not furnished any evidence indicating when this occurred. Accordingly, because any estimate of the number of months that Sanchez was stealing services would be sheer speculation, the Court can only assess damages on the assumption that Sanchez first intercepted Time Warner's signal some time during May 2001. Time Warner's monthly charge for a commercial establishment to acquire its Standard package, which would have been necessary in order to purchase pay-per-view programming, is approximately $75.
According to ACI, approximately thirty-two people inside El Valle Restaurant had access to the Event. Time Warner has not indicated what Sanchez charged each patron to view the Event, which suggests that there may have been no surcharge. It appears, however, that commercial cable subscribers are often charged a fee of $20 per patron for the right to view programming similar to the Event. See Top Rank, Inc. v. Ortiz, 2003 WL 1960211, at *1 (S.D.N.Y. Mar. 27, 2003) (noting that plaintiff would have charged licensing fee of $20 per patron); Friends II, 2003 WL 1990414, at *4 (same); Nina's Restaurant, 2002 WL 1000286, at *3 (same). On this basis, Time Warner would be entitled to recover $715 (32 × $20 + $75). However, as noted above, the statutory minimum prescribed by Section 605 is $1,000. Accordingly, because this amount is greater than Time Warner's damages, Time Warner is entitled to recover $1,000.
Time Warner is also entitled to recover an additional sum under 47 U.S.C. § 605(e)(3)(C)(ii) because the illegal signal was received at a commercial establishment, thereby establishing that it was tapped for "commercial advantage." In order for the El Valle Restaurant to receive the closed-circuit broadcast, it had to have engaged in some deliberate act, such as using an unauthorized decoder or altering the cable service in some way so as to receive and view the scrambled transmission. While the display of the Event may have led to an increased number of patrons at the El Valle Restaurant, as noted earlier, Time Warner has not shown that the availability of the broadcast was advertised or that Sanchez charged a fee. For these reasons, an additional award of $5,000 pursuant to Section 605(e)(3)(C)(ii) would appear to suffice. See Time Warner Cable of New York City v. Taco Rapido Restaurant, 988 F. Supp. 107, 112 (E.D.N.Y. 1997) (imposing additional award of $5,000 for willful conduct).
B. Attorneys' Fees
As the prevailing party, Time Warner is entitled to an award of its costs and reasonable attorneys' fees in this action. 47 U.S.C. § 605(e)(3)(B)(iii). 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). Time Warner has submitted detailed time records indicating that Daniel J. Leflkowitz, Esq. worked .7 hours on this case at an hourly rate of $240, for a total of 168; Wayne R. Louis, Esq. worked 1.8 hours at an hourly rate of $180, for a total of $324; Michael D. Cassell, Esq. worked 7.5 hours at an hourly rate of $165, for a total of $1,237.50; Janine P. Zabbia, a paralegal, worked 2 hours at an hourly rate of $85 for a total of $170; and, Susan A. Weindler, another paralegal, worked 6.8 hours at an hourly rate of $85 for a total amount of $578. (See Affidavit of Michael D. Cassell Esq., sworn to on March 21, 2003 ("Michael Cassell Aff."), ¶¶ 5-15). Based upon Time Warner's submissions, I am satisfied that the hourly rates charged and number of hours expended are reasonable. See Entertainment by JJ, Inc. v. Tacos El Caminero Restaurant. Inc., 2002 WL 975601 at *1 (S.D.N.Y. May 13, 2002) (applying similar hourly rates). Accordingly, Time Warner is entitled to attorneys' fees in the amount of $2,477.50.
Time Warner also seeks reimbursement of the $150 filing fee and ACI's investigation fee $1,556.96. In federal court, the taxable costs for which a party may seek reimbursement include the cost of deposition and trial transcripts, witness fees and mileage, interpreting costs, and the cost of certain small photographs. See 28 U.S.C. § 1920; Fed.R.Civ.P. 54; Local Civ. R. 54.1. There is no provision, however, for a prevailing party to be awarded the cost of its investigator. See Crawford Fitting Company, et al., v. J.T. Gibbons, Inc. Champion Int'l Corp., 482 U.S. 437, 441-42 (1987) ("costs" include only the specific items enumerated in 28 U.S.C. § 1920). See also Whitfield v. Scully, 241 F.3d 264, 2670 (2d Cir. 2001) (consideration deference should be accorded to a district court's interpretation of its own local rule). Moreover, even if investigative costs were taxable, it appears from the face of ACI's bills, that less than one third of the amount requested derives from work on this case. Time Warner has also failed to submit in its affidavit the total number of hours spent on the investigation of this case and the hourly investigative rate. (See Joseph Aff. ¶ 7). For these reasons, Time Warner's costs should be limited to the $150 filing fee.
I recommend that Time Warner be awarded judgment in the amount of $8,627.50, consisting of statutory damages in the amount of $6,000, attorneys' fees in the amount of $2,477.50, and costs in the amount of $150.
VI. Notice of Procedure for Filing 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 (10) days from today, make them in writing, file them with the Clerk of the Court, and send copies to the chambers of the Honorable George B. Daniels, United States District Judge, at the United States Courthouse, 40 Centre Street, New York, N.Y. 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 Daniels. 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); 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), 6(e), 72(b).