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TIME WARNER CABLE OF NEW YORK CITY v. OLMO

August 20, 1997

TIME WARNER CABLE OF NEW YORK CITY, a division of Time Warner Entertainment Company, L.P., Plaintiff, against IVAN OLMO, Defendant.


The opinion of the court was delivered by: LEVY

REPORT AND RECOMMENDATION

 LEVY, United States Magistrate Judge:

 By order dated December 5, 1996, the Honorable David G. Trager, United States District Judge, issued a default judgment against defendant Ivan Olmo and referred this case to me to report and recommend the amount of damages and attorney's fees, if any, to which plaintiff is entitled. *fn1" For the reasons stated below, I respectfully recommend that judgment be entered in favor of plaintiff and against defendant Ivan Olmo in the amount of $ 21,000.00 and that plaintiff be awarded reasonable attorney's fees and costs in the amount of $ 1,586.00.

 BACKGROUND AND FACTS

 Plaintiff Time Warner Cable of New York City ("plaintiff" or "TWCNYC") brought this action against defendant Ivan Olmo ("defendant" or "Olmo") on September 13, 1996, alleging violations of the Communications Act of 1934, as amended, 47 U.S.C. §§ 553 and 605 (1991). The complaint alleges that in exchange for cash payment, Olmo modified two cable television decoders, enabling them to descramble all of TWCNYC's programming services, including premium and pay-per-view services, without authorization. Defendant seeks statutory damages, plus reasonable attorney's fees and costs. After Olmo failed to appear in this action, Judge Trager entered a default judgment against him and referred the issue of damages to me. By order dated December 9, 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. 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), cert. denied, 506 U.S. 1080, 122 L. Ed. 2d 357, 113 S. Ct. 1049 (1993); Main Events/Monitor Prods. v. Batista, No. 96 CV 5089, 1997 WL 269589, at *1 (E.D.N.Y. April 21, 1997.) 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 Kings and Queens Counties 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 the basic cable package, including Cinemax, Home Box Office, and Showtime, for which a subscriber must pay 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 in addition to the subscriber's regular monthly fee.

 The signals TWCNYC transmits are private communications that are solely for the benefit of TWCNYC's paying customers. TWCNYC's signals for premium channels 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 paying 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.

 Defendant Ivan Olmo is an individual residing at 106-07 Otis Avenue, Flushing, New York. In late 1995, TWCNYC "became aware" that defendant was distributing business cards indicating that he was in the business of "cable repair." *fn2" (Inquest Affidavit of Thomas Allen, sworn to January 23, 1997 ("Allen Aff."), P12). On two unspecified dates in January of 1996, TWCNYC's undercover investigators went to Olmo's home in Flushing, gave Olmo a cable decoder, and asked him to modify the device so that it could receive and display all of TWCNYC's programming services, including premium and pay-per-view programming services, without payment to or authorization from TWCNYC. (Id. P12). Olmo did so and returned the devices to the investigators. (Id.) On the first occasion, the investigators paid Olmo $ 140.00, and on the second occasion they paid Olmo $ 125.00. *fn3" (Id.)

 The investigators then returned both of the modified devices to TWCNYC for inspection and testing. (Id.) TWCNYC's tests confirmed that each of the devices Olmo modified was capable of receiving and displaying TWCNYC's programming, including premium and pay-per-view programming services. (Id.) Plaintiff also alleges that during the transactions, Olmo told the investigators that he had modified other devices in addition to the two modified for TWCNYC's investigators. *fn4" (Id. at P13). However, plaintiff does not specifically allege or provide any evidence that defendant actually modified any devices other than the two that plaintiff's investigators provided.

 Plaintiff seeks the maximum statutory damages of $ 100,000 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)(ii), for each of Olmo's documented violations. Plaintiff also 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 actual damages and lost profits, or statutory damages (see 47 U.S.C. §§ 605(e)(3)(C)(i)(II) and 553(c)(3)(A)), § 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 of 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 statutory damages for " each violation of paragraph (4) of this subsection . . . in a sum not less than $ 10,000, or more than $ 100,000, as the court considers just." (emphasis added).

 Sections 553 and 605 both contain express provisions against the manufacture, sale, and distribution of devices for the unauthorized reception of cable television ...


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