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INTERNATIONAL CABLEVISION, INC. v. NOEL

September 30, 1997

INTERNATIONAL CABLEVISION, INC. d/b/a ADELPHIA CABLE, Plaintiff, -vs- MARVIN NOEL, Defendant.

JOHN T. CURTIN, United States District Judge.


The opinion of the court was delivered by: CURTIN

BACKGROUND

 Plaintiff International Cablevision, Inc., d/b/a Adelphia Cable ("Cablevision"), brought this action against defendant Marvin Noel seeking damages and injunctive relief, claiming that Noel sold electronic devices designed to permit unauthorized interception and decoding of Cablevision's cable television programming signal, in violation of 47 U.S.C. §§ 553(a)(1) and 605(e)(4). For a thorough review of the factual background of this case, refer to International Cablevision, Inc. v. Noel, 859 F. Supp. 69 (W.D.N.Y. 1994), vacated sub nom, International Cablevision, Inc. v. Sykes, 75 F.3d 123 (2d Cir.), cert. denied, 136 L. Ed. 2d 217, 117 S. Ct. 298 (1996) (Item 25). In brief, on April 9, and April 18, 1991, defendant sold pirate cable descrambler devices to two undercover Cablevision investigators. Unbeknownst to defendant, the investigators tape-recorded their conversation with him during the second sale. At each sale, defendant explained to the investigators how to attach the units to their existing cable and television connections, and stated that so long as they paid for Cablevision's basic service, they would be able to receive premium programming without having to pay for it. Cablevision tested the units and found that they could indeed descramble premium programing on a television receiving only the company's basic service. Defendant told the investigators to be careful about whom they talked to about the units, to hide them from the cable company, and that these devices were "illegal."

 Soon after defendant filed his answer to plaintiff's complaint, plaintiff filed a motion for summary judgment. Although defendant conceded that he violated 47 U.S.C. § 553, he filed a cross-motion to dismiss the § 605 claim. On August 1, 1994, this court granted defendant's motion to dismiss plaintiff's § 605 claim, granted plaintiff's summary judgment motion on the § 553 claim, and denied plaintiff's summary judgment motion on the § 605 claim. In considering whether the provisions of § 605(e)(4) applied to this case, this court ruled that the descramblers sold by defendant were not "primarily of assistance in the unauthorized decryption of satellite cable programming" within the meaning of § 605(e)(4). Noel, 859 F. Supp. at 77. The court also concluded that defendant had not violated § 605(a) by selling the two descramblers to Cablevision investigators. Concluding that only § 553 was applicable to defendant's conduct, this court awarded the minimum of $ 250 damages authorized by § 553(c)(3)(A)(ii) for defendant's violations, declining to apply the reduction to no less than $ 100 damages authorized by § 553(c)(3)(C) "where the court finds that the violator was not aware and had no reason to believe that his acts constituted a violation of [§ 553]." Id. at 79. This court denied injunctive relief to plaintiff. Id. Plaintiff appealed this court's final order.

 In International Cablevision, Inc. v. Sykes, 75 F.3d 123 (2d Cir.), cert. denied, 136 L. Ed. 2d 217, 117 S. Ct. 298 (1996), the Court of Appeals considered the consolidated appeal of Cablevision's action against Noel and Cablevision's appeal of its action against John Sykes, in which this court also dismissed plaintiff's claims under § 605, found defendant liable under § 553, and awarded statutory damages of $ 250 pursuant to § 553(c)(3)(A)(ii). *fn1" The Second Circuit reversed this court's finding that the conduct of defendants Noel and Sykes did not violate § 605, and remanded both cases for the imposition of damages under § 605(e), instead of the lesser damages under § 553, and for the mandatory award of attorneys' fees pursuant to § 605(e). 75 F.3d at 129. In reaching this conclusion, the Second Circuit considered whether the descramblers sold by Sykes and Noel were intended to be used to "receive any communication by radio" within the meaning of the third sentence of § 605(a). Id. The court held that in light of the legislative history and the uniform pre-1984 judicial interpretation of § 605 as applicable to the distribution of descramblers for the interception of cable television, § 605 continues to apply to such distribution, and therefore to the conduct of Sykes and Noel. Id., at 133. The court explicitly instructed that the more severe penalties provided by § 605(e)(3)(C)(i)(II) for violations of § 605(e)(4) apply in this case. *fn2" Id. In a footnote, the court acknowledged that not all programming distributed from the headend of a cable television originates as a radio communication. Id., at 131, n. 5. The court instructed that "if it could be proved in a particular case that the interception at issue, or the distribution of a descrambler for the purpose of such interception, would not involve any radio-originated communications, only § 553, and not § 605, would be violated in that case." Id.

 On June 12, 1996, plaintiff moved for the enforcement of the Second Circuit's mandate (Item 34) seeking the imposition of the statutory damages authorized under § 605(e)(3)(C)(i)(II) and the award of reasonable attorneys' fees and costs. In support of its motion, plaintiff submitted a memorandum of law (Item 36) and several affidavits setting forth the attorneys' fees and costs it incurred in the prosecution of this case (Items 35, 37-39, 48). Defendant responded to plaintiff's arguments regarding the appropriate statutory damages and attorneys' fees in a memorandum of law (Item 44). He argues that the court should not award plaintiff the full $ 20,000 in statutory damages and that the court should limit the attorneys' fees and costs which plaintiff is entitled to recover.

 On August 15, 1996, defendant filed a cross motion for a determination that § 605 is inapplicable to the facts of this case (Item 43). Defendant argues that the Second's Circuit's acknowledgment in footnote 5 that § 605 is not applicable in certain situations should be applied. He contends that the record fails to demonstrate that he intended or otherwise understood that the two scramblers sold by him in April 1991 would be used to intercept radio-originated, as opposed to strictly wire communications; thus, this is one of the situations where § 605 does not apply (Items 43-44). Plaintiff responded to defendant's cross motion with a memorandum of law (Item 47).

 The parties waived the opportunity to have oral argument on either of the pending motions and agreed to submit their motions on the papers.

 DISCUSSION

 I. Defendant's Motion for a Determination that 47 U.S.C. § 605 is Inapplicable to this Case

 Despite the Second Circuit's express finding that § 605 applies to defendant's conduct at issue in this action and that the more severe statutory penalties provided by § 605(e)(3)(C)(i)(II) apply, Sykes, 75 F.3d at 133, defendant urges this court to issue an order determining that § 605 does not apply. Defendant relies in part on the Second Circuit's statement in footnote 5. See id., at 131, n. 5. Defendant reads footnote 5 to suggest that § 605 only applies in cases where the defendant distributed a descrambler with the intent to intercept radio-originated communications. He argues that the record fails to demonstrate that he intended or otherwise understood that the two descramblers that he sold in April 1991 would be used to intercept radio-originated, as opposed to strictly wire, communications (Item 43, P 4; Item 44, p. 3). Defendant further contends that there is "absolutely no evidence in the record [demonstrating that] he understood [that] the descramblers would be used to intercept radio-originated communications." (Item 44, p. 3).

 Defendant has misleadingly paraphrased the Second Circuit's discussion in footnote 5 and the surrounding text by inserting an intent requirement where none exists. The Second Circuit merely recognized that § 605 would not apply "if it could be proved in a particular case that the interception at issue, or the distribution of a descrambler for the purpose of such interception, would not involve any radio-originated communications." Sykes, 75 F.3d at 131, n. 5 (emphasis added). The court did not intend for footnote 5 to supply the rule for defendant's case since it had been conclusively demonstrated that plaintiff's "distribution of cable programming involves several types and stages of communication, including receipt of signals from satellite, transmission via radio, and retransmission over coaxial cable wiring." International Cablevision v. Sykes, 997 F.2d 998, 1009 (2d Cir. 1993). The case was remanded for the sole purpose of the imposition of statutory damages and mandatory costs, including attorneys' fees. The court did not indicate or even suggest that there remain any open issues regarding the applicability of § 605.

 II. Plaintiff's Motion for the Enforcement of the Second Circuit's Mandate

 A. Statutory Damages

 As explained above, the Second Circuit held that § 605 applied to defendant's conduct, that defendant violated § 605(e)(4), and that the imposition of damages under § 605(e) instead of the lesser damages available under § 533 is appropriate. Sykes, 75 F.3d at 129 and 133. The court determined that because defendant acted with knowledge (or reason to know) that the descrambler is primarily of assistance in the unauthorized decryption of satellite cable programming, the more severe statutory penalties provided by § 605(e)(3)(C)(i)(II) for violations of § 605(e)(4) apply. Id., at 133. Under § 605(e)(3)(C)(i)(II), for each violation of § 605(e)(4), "an aggrieved party may recover statutory damages in a sum not less than $ 10,000, or more than $ 100,000, as the court considers just." 47 U.S.C. § 605(e)(3)(C)(i)(II).

 Plaintiff contends that these mandatory damages are designed to compensate the aggrieved party for its loss and to deter the defendant and others from future violations. See Cablevision Systems New York City Corp. v. Faschitti, 1996 U.S. Dist. LEXIS 1212, 1996 WL 48689 (S.D.N.Y.). Plaintiff explains that Congress enacted the statutory damages provided under § 605(e)(3)(C)(i)(II) because of the difficulty in proving damages resulting from a § 605 violation. Time Warner Cable v. U.S. Cable T.V., Inc., 920 F. Supp. 321, 329 (E.D.N.Y. 1996). Plaintiff argues that statutory damages of at least $ 10,000 for each violation of § 605(e)(4) are necessary to ensure the "continued viability of the cable service industry" and to relieve cable subscribers from the burden of "subsidizing the costs of cable pirating." Storer Cable Comm., Inc. v. Joe's Place Bar & Restaurant, 819 F. Supp. 593, 596 (W.D.Ky. 1993) (citing H.R. 4103, 98th Cong., 2d Sess. (1984), reprinted in 1984 U.S.C.C.A.N. 4655, 4720).

 Plaintiff further contends that an award of $ 10,000 per violation does not fully compensate it for the harm caused by defendant's conduct, that the harm caused by the sale of pirate descramblers is immeasurable, and that its real loss is evidenced by the fact that "many non-subscribers may feel no need to subscribe to [Cablevision] when they can access [its] programming" by using decoding devices such as those sold by defendant. Faschitti, 1996 WL 48689, *2 (S.D.N.Y.).

 Defendant argues that this court should apply § 605(e)(3)(C)(iii), rather than § 605(e)(3)(C)(i)(II), finding that defendant was not aware that his acts constituted a violation of the statute (Item 44, pp.5-6). He also argues that the court should base the damages award on a single violation of the statute, rather than two separate violations, regardless of whether the court awards damages under § 605(e)(3)(C)(iii) or § 605(e)(3)(C)(i)(II) (Id., pp. 6-7). Defendant contends that both of his violations occurred as a result of "sting" operations set up and initiated by plaintiff. Instead of filing suit after the initial violation, plaintiff opted to arrange another transaction. Defendant asserts that the damages provisions of the federal statute give this plaintiff, as well as other potential plaintiffs, the incentive to encourage multiple violations of the statute in order to recover greater damages. Defendant notes that the sales at issue were made to the same "customers" and occurred within a short period of time.

 Although the court does not accept plaintiff's argument that $ 10,000 does not fully compensate Cablevision for the harm defendant has caused by the sale of the two descramblers, *fn3" the court concedes that the Second Circuit unambiguously directed this court to impose the more severe statutory penalties provided by § 605(e)(3)(C)(i)(II). It explicitly addressed the question of the extent of defendant's knowledge regarding the legality of his ...


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