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TIME WARNER CABLE OF NEW YORK CITY v. TACO RAPIDO

May 13, 1997

TIME WARNER CABLE OF NEW YORK CITY, a division of Time Warner Entertainment Company, L.P., Plaintiff, against TACO RAPIDO RESTAURANT, et al., Defendants.


The opinion of the court was delivered by: LEVY

 LEVY, United States Magistrate Judge:

 By order dated October 2, 1996, the Honorable Jack B. Weinstein, United States District Judge, entered a default judgment against defendant Rincon Sabroso Comida a Tipica Colomiana y Mariscos Restaurant ("defendant" or "Rincon Sabroso") and referred this matter to me to report and recommend the amount of damages to be awarded plaintiff, not to exceed $ 110,000, plus reasonable attorney's fees and costs. For the reasons stated below, I respectfully recommend that judgment be entered in favor of plaintiff and against defendant Rincon Sabroso in the amount of $ 8,750.00, and that plaintiff be awarded reasonable attorney's fees and costs in the amount of $ 1,802.75.

 BACKGROUND AND FACTS

 Plaintiff Time Warner Cable of New York City ("plaintiff" or "TWCNYC") brought this action against defendant Rincon Sabroso and others on May 2, 1996, alleging violations of the Communications Act of 1934, as amended, 47 U.S.C. §§ 553 and 605 (1991). The complaint alleges that Rincon Sabroso received TWCNYC's private cable television programming without authorization and seeks statutory damages, plus reasonable attorney's fees and costs. After Rincon Sabroso failed to appear in this action, Judge Weinstein entered a default judgment against it and referred the issue of damages to me. By order dated October 16, 1996, I directed the parties to file written inquest submissions. Plaintiff filed its written submission in a timely manner, but defendant again failed to respond.

 Once a default judgment is entered, a defendant is deemed to have admitted all of the well-pleaded allegations in the complaint pertaining to liability. See Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992), cert. denied, 506 U.S. 1080, 122 L. Ed. 2d 357, 113 S. Ct. 1049 (1993); Au Bon Pain Corp. v. Artect. Inc., 653 F.2d 61, 65 (2d Cir. 1981); Montcalm Publ'g Corp. v. Ryan, 807 F. Supp. 975, 977 (S.D.N.Y. 1992). Plaintiff's allegations are as follows:

 Pursuant to certain franchises, plaintiff, a division of Time Warner Entertainment Company, L.P., operates and maintains a cable television system within parts of Queens County that offers broadcast and cable television programming to its subscribers. TWCNYC's programming includes "basic cable" and "premium" channels. "Basic cable" is a package of channels that a subscriber receives at a flat monthly rate. "Premium" channels are added channels outside of basic cable service, including Home Box Office, Showtime and the Movie Channel, for which a subscriber pays an additional monthly fee. TWCNYC also offers pay-per-view programming, a service that allows subscribers to view individual movies, sporting events or other entertainment for a per-event fee.

 The signals TWCNYC transmits are private communications that are solely for the benefit of TWCNYC's paying customers. TWCNYC's signals for premium channel and pay-per-view options are electronically coded or "scrambled" so that they must be decoded by electronic decoding equipment in order for one to view the signals clearly on a television receiver. As part of each customer's subscription, TWCNYC provides a converter-decoder box that allows the subscriber to view the type and amount of programming that the subscriber has purchased and is authorized to receive.

 On August 19, 1995, TWCNYC broadcast the Mike Tyson-Peter McNeeley Pay-Per-View Boxing Event ("the Event" or "the Boxing Event"). On that evening, TWCNYC retained a private investigation firm, ACI Investigations ("ACI"), to visit various commercial establishments in the franchise area to determine whether any such establishments were intercepting and publicly displaying TWCNYC's telecommunication signals of the Event without authorization from, or payment to, TWCNYC.

 On August 19, 1995 at approximately 10:20 p.m., ACI investigators Ron Betterly and Edward Kling entered Rincon Sabroso and observed approximately seventy-five (75) people watching the Boxing Event on a television set above the bar. (Affidavit of Ron Betterly, sworn to November 21, 1996, at P 4, 5). The investigators also saw approximately twenty (20) people standing outside the establishment, viewing the Event through a window, and they observed that Rincon Sabroso did not charge a cover fee on that evening. (Id. at P 4, 6). The investigators did not see any advertising of the Event. (Id. at P 4).

 Plaintiff seeks the maximum statutory damages of $ 10,000 pursuant to 47 U.S.C. § 605(e)(3)(C)(I)(II) or, in the alternative, $ 10,000 pursuant to 47 U.S.C. § 553(c)(3)(A), for Rincon Sabroso's one documented violation. In addition, plaintiff seeks an additional damage award of up to $ 100,000 under section 605(e)(3)(C)(ii), or up to an additional $ 50,000 pursuant to section 553(c)(3)(B), plus reasonable attorney's fees and costs.

 DISCUSSION

 Plaintiff requests an award under either 47 U.S.C. § 605 or 47 U.S.C. § 553. While both statutes allow the aggrieved party to elect to recover either actual damages and lost profits, or statutory damages (see 47 U.S.C. §§ 605(e)(3)(C)(I)(I) and 553(c)(3)(A)), section 605 contains a more severe statutory damages provision. Specifically, 47 U.S.C. § 553(c)(3)(A)(ii) allows an aggrieved party to recover statutory damages for "all violations involved in the action, in a sum not less than $ 250 or more than $ 10,000 as the court considers just," while 47 U.S.C. § 605(e)(3)(C)(I)(II) allows for statutory damages ...


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