United States District Court, Southern District of New York
April 2, 2003
CABLEVISION SYSTEMS NEW YORK CITY CORPORATION, PLAINTIFF
MARCUS BROWN AND BEAUTY SALON SUPPLY, DEFENDANTS
The opinion of the court was delivered by: Kevin Nathaniel Fox, United States Magistrate Judge
REPORT AND RECOMMENDATION
In this action, Cablevision Systems New York City Corporation ("Cablevision") alleges that defendants Marcus Brown and Beauty Salon Supply engaged in the illegal interception of cable television programming signals, in violation of the Cable Communications Policy Act ("Communications Act"), as amended, 47 U.S.C. § 553(a)(1) and 605(a). Plaintiff also alleges that the defendants violated New York State Public Service Law § 225.6.
Upon the defendants' failure to file an answer or otherwise respond to the Complaint, your Honor ordered that a default judgment be entered against defendant Beauty Salon Supply. Thereafter, your Honor referred the matter to the undersigned to conduct an inquest and to report and recommend the amount of damages, if any, to be awarded against that defendant.*fn1
The Court directed Cablevision to serve and file its proposed findings of fact and conclusions of law, and an inquest memorandum setting forth its proof of damages, costs of this action, and its attorneys' fees. Defendant Beauty Salon Supply was directed by the Court to serve and file any opposing memoranda, affidavits and exhibits, as well as any alternative findings of fact and conclusions of law it deemed appropriate. Defendant did not file any papers in opposition to plaintiff's submissions. Plaintiff's submissions aver that it is entitled to $10,000 in statutory damages, as well as compensatory and punitive damages, in an amount to be determined by the Court, pursuant to New York State Public Service Law, and $3,688.00 in costs and attorneys' fees.
For the reasons set forth below, I recommend that Cablevision be awarded $4,596.80: statutory damages pursuant to 47 U.S.C. § 605 in the amount of $2,757.30, attorneys' fees in the amount of $1,689.50, and costs in the amount of $150.
II. BACKGROUND AND FACTS
Based upon the submissions by plaintiff, the Complaint filed in the instant action — the allegations of which perforce of defendant's default must be accepted as true, except those relating to damages, 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) — and the Court's review of the entire court file in this action, the following findings of fact are made:
Cablevision is a corporation organized and existing under the laws of the state of Delaware, which is authorized to conduct business in New York State. Cablevision has its principal office at 1111 Stewart Avenue, Bethpage, New York. Complaint, ¶ 4, at 2. Defendant Beauty Salon Supply is a commercial business located at 585 East 168th Street, Bronx, New York. See id., 65, at 2.
Pursuant to franchises awarded to it by New York City, Cablevision is authorized to construct, operate and maintain cable television systems in parts of Kings County and all of Bronx County. The defendant was located in Bronx County at all times relevant to the instant action. See id., ¶¶ 5, 6, at 2.
Cablevision offers cable television services to subscribers who request and pay for them. See id. ¶ 6, at 2. Cablevision provides various tiers of programming services. "Basic" service is a level of service to which an individual can subscribe at a monthly rate and receive enhanced quality reception of broadcast stations, as well as a small number of additional programming services. See Affidavit of Charles Carroll in Support of Damages Inquest ("Carroll Aff."), ¶ 3, at 2. "Family" service is a higher level of service to which a customer can subscribe at a monthly rate and receive all of Cablevision's programming services, with the exception of its premium and pay-per-view programming services. Family service is offered to individual subscribers at a monthly rate of approximately $37.15. See id.
Cablevision's residential subscribers may also elect to subscribe to one or more premium services such as Cinemax, Home Box Office or Showtime, for an additional monthly charge per service, or pay-per-view programming, which includes movies, sporting events and other entertainment, for a per-event fee. See id., ¶¶ 4-5, at 2.
Premium services cost an average of $10.95 per month per service; packages of premium services, not including pay-per-view events, cost approximately $71.95 per month. Cablevision's pay-per-view service includes selections which range in price from $4.50 to $49.95 per selection, and are offered continuously over a 24-hour period. See id., ¶ 5, at 2. The aggregate value of each individual pay-per-view event offered over a typical month, assuming each pay-per-view event is viewed only once, is hundreds of dollars. See id.
Cablevision provides its cable television service to subscribers by way of subscription agreements. Cablevision agrees to provide the programming services requested by a subscriber in return for the subscriber's agreement to pay for those services on a monthly basis. See id., ¶ 6, at 2-3. Cablevision's subscribers pay a monthly fee for the type of programming services they have selected and purchased from Cablevision. Each Cablevision subscriber is entitled to receive only the level and amount of cable programming and services for which that subscriber has paid. See id., ¶ 7, at 3.
As part of its cable service, Cablevision provides each of its subscribers with equipment known as a converter-decoder. Cablevision programs that equipment so that each subscriber can receive and view only the level and amount of cable programming he or she has selected and purchased, and is authorized to receive. The rental fee for the converter-decoder provided by plaintiff to its subscribers is regulated by the Federal Communications Commission on an actual cost basis. The fee is included on the subscriber's monthly bill. See id., ¶ 8, at 3.
Cablevision receives the signals to its cable television programming services from orbiting satellites and local radio towers. The theft of cable programming is commonly known as cable "piracy." In order to protect its cable programming from theft and unauthorized reception, Cablevision encrypts or "scrambles" the signals to all programming which a subscriber has not purchased and is not authorized to receive. When Cablevision's programming is in a scrambled mode, it is distorted and unviewable to a subscriber who has not paid for such programming. Scrambling is a principal security measure used by Cablevision and other cable television operators to protect their programming services against unauthorized reception. See id., ¶¶ 9, 13, at 3-4.
Either by technical modification or computer command, Cablevision authorizes the converter-decoders provided to its subscribers to descramble reception of only those programming channels which a subscriber has purchased. See id., ¶ 10, at 3. The converter-decoders which Cablevision provides to its subscribers have a technology feature and function known as "addressability." Addressability is a communication link between a cable operator's central computer and the descrambling of computer circuitry in each converter-decoder provided to its subscribers. See id., ¶ 11, at 4.
There is a "black market" industry of various manufacturers, vendors, and distributors of "pirate" converter-decoders. These "pirate" converter-decoders are sold to cable subscribers who use these devices to avoid paying a cable operator's subscription fees for the authorized reception of premium and pay-per-view cable television programming. A cable operator's authorized converter-decoder can also be modified into a "pirate" converter-decoder by inserting unauthorized integrated circuits, commonly known as "chips," into that device or by electronically reprogramming the device. "Pirate" converter-decoders enable their users to receive all scrambled premium and pay-per-view cable television programming in a descrambled mode, regardless of whether such services have been paid for or whether the user is authorized to receive such programming. With a "pirate" converter-decoder, the addressability technology is disabled so that the cable operator is unable to communicate with the "pirate" converter-decoder or even recognize that it has been attached to its cable system. See id., ¶¶ 14, 15, at 4-5.
During routine audits of its cable television system, Cablevision investigators observed an illegal attachment on the premises of Beauty Salon Supply. The illegal attachment indicated that the defendant was receiving unauthorized cable television programming from Cablevision. See id., ¶ 16, at 5.
On August 24, 1999, Cablevision sent its investigator, Michael Boylan ("Boylan"), to Beauty Salon Supply to determine whether it was receiving Cablevision's cable television programming services without authorization. Boylan avers that he entered the defendant's premises and observed an unauthorized "pirate" cable television decoder, which was attached to a television set. See Affidavit of Michael Boylan In Support of Damages Inquest ("Boylan Aff."), ¶ 3, at 2. According to Boylan, Pedro Cappacetti, a Cablevision employee, examined the decoder and determined that it had been modified. See id. Boylan states that he changed the channels on the television set and observed premium and pay-per-view cable television stations offered by Cablevision. See id., ¶ 41, ¶ 4, at 2. At that time, the modified converter-decoder was seized by the police and removed from the premises. See id., ¶ 5, at 2.
Beauty Salon Supply was not authorized to receive any cable television programming services from Cablevision. In order for the defendant to be able to display Cablevision's premium and pay-per-view channels, it would have to install an unauthorized converter-decoder onto Cablevision's cable television system or otherwise tamper with plaintiff's equipment. See Carroll Aff., ¶ 18, at 5-6.
III. CONCLUSIONS OF LAW
47 U.S.C. § 553*fn2 and 605*fn3 both prohibit the unauthorized interception and reception of cable programming services which originate and are delivered via satellite or by other means of over-the-air signal transmission. See Time Warner Cable of New York City v. Barnes, 13 F. Supp.2d 543, 547-48 (S.D.N.Y. 1998) (citing International Cablevision, Inc. v. Sykes, 75 F.3d 123, 133 [2d Cir. 1996]); Cablevision Systems New York City Corp. v. Lokshin, 980 F. Supp. 107, 112 (E.D.N.Y. 1997).*fn4
Cablevision's premium and pay-per-view programming is sent to Cablevision from orbiting satellites. See Carroll Aff., ¶ 9, at 3. Accordingly, Cablevision's cable programming services are protected from unauthorized reception under 47 U.S.C. § 605(a). See Barnes, 13 F. Supp.2d at 548 (citations omitted).
Cablevision obtained information indicating that defendant was receiving unauthorized cable television programming. On August 24, 1999, Cablevision confirmed this report by causing defendant to display premium and pay-per-view programming on a television set located inside its place of business. Neither the defendant nor any other person or entity located at the defendant's business address was authorized to receive Cablevision cable television programming services. Therefore, in order for the defendant to be able to display plaintiff's programming, it had to install an unauthorized converter-decoder that enabled it to descramble Cablevision's cable signals or otherwise tamper with plaintiffs equipment. Plaintiffs submissions establish that the defendant violated 47 U.S.C. § 553(a)(1) and 605(a).
Cablevision possesses "proprietary rights" in the communications which Beauty Salon Supply intercepted without authorization, and is thus a "person aggrieved" within the meaning of 47 U.S.C. § 553(c)(1) and 605(e)(3)(A).
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. See Barnes, 13 F. Supp.2d at 548; American Cablevision of Queens v. McGinn, 817 F. Supp. 317, 320 (E.D.N.Y. 1993). For violations of both sections 553 and 605, an aggrieved cable operator is entitled to elect to recover damages under section 605 in consideration of section 605's higher damages awards. See Barnes, 13 F. Supp.2d at 548 (citations omitted).
Cablevision has elected to recover statutory damages against defendant rather than actual damages. Section 605(e)(3) authorizes the court to award statutory damages of "not less than $1,000 or more than $10,000, as the court considers just." 47 U.S.C. § 605(e)(3)(C)(i)(ii). Cablevision avers that the defendant's default has prevented it from discovering evidence establishing how long defendant received unauthorized programming services. Accordingly, Cablevision requests that it be awarded the maximum statutory damages available from the defendant. An award of the amount sought by the plaintiff would be inappropriate.
The record establishes that defendant was receiving unauthorized cable service from on or about August 24, 1999. The instant Complaint was filed on October 27, 2000. Therefore, the Court finds that defendant's unauthorized cable service lasted approximately fourteen (14) months.
The record reflects that the full range of Cablevision's premium programming channels, not including pay-per-view events, was offered at an average cost of approximately $71.95 per month at the time of the events giving rise to this action. See Carroll Aff., ¶ 4, at 2. Therefore, it is reasonable to conclude that for a period of fourteen (14) months, from August 1999 to October 2000, defendant received unauthorized access to programming valued at $71.95 per month. Accordingly, $1,007.30 in unpaid programming fees were lost by Cablevision.
The aggregate value of each pay-per-view event offered over a typical month, assuming that each pay-per-view event is viewed only once, is hundreds of dollars. However, to conclude that defendant's personnel viewed each and every pay-per-view selection offered, on each day for the relevant fourteen-month period, is unreasonable.
As noted, supra, Cablevision's pay-per-view events range in cost from $4.50 to $49.50. Based on these costs, the Court finds that an average value of$125 per month for the defendant's unauthorized free access to Cablevision's pay-per-view events is appropriate See e.g., Lokshin, 980 F. Supp. at 113 (finding award of $125 per month for unauthorized pay-per-view services to be reasonable). Under the circumstances, $1,750 is the reasonable value of the pay-per-view selections defendant's personnel might have viewed without making the requisite payment to Cablevision. This sum takes into consideration the award parameter specified in the statute and defendant's fourteen (14) months of unauthorized usage. As a result, Cablevision should be awarded $2,757 under 47 U.S.C. § 605(e)(3)(C)(i)(II), for the defendant's use of a "pirate" decoding device. In reaching this determination, the Court also considers the defendant's failure to appear in this action, which illustrates his indifferent attitude toward the Communications Law. See Cablevision Systems New York City Corp. v. Faschitti, 1996 WL 48689, at *2 (S.D.N.Y. Feb. 7, 1996) (citing Cable/Home Communication Corp. v. Network Prods., Inc., 902 F.2d 829, 852 [11th Cir. 1990] [recognizing goal of deterrence and noting that court may consider party's attitude in determining statutory damages award]).
Accordingly, the Court finds that the plaintiff is entitled to an award of $2,757.30, pursuant to 47 U.S.C. § 605, for the defendant's use of a "pirate" decoding device to intercept illegally plaintiff's cable televison programming services.*fn5
47 U.S.C. § 605 authorizes a court to "direct the recovery of full costs, including the award of reasonable attorney's fees to an aggrieved party who prevails." See 47 U.S.C. § 605(e)(3)(B)(iii).
When fixing a reasonable rate for attorney fees, it is appropriate for a court to consider and to apply the prevailing market rates in the relevant community for similar legal work of lawyers of reasonably comparable skill, experience and reputation. See Blum v. Stenson, 465 U.S. 886, 895 n. 11, 104 S.Ct. 1541, 1547 n. 11 (1984). In addition, it is permissible for a court to rely upon its own knowledge of private firm hourly rates in deciding what reasonable attorney fees are in the community. See Miele v. N.Y. State Teamsters Conf. Pens. & Retirement Fund, 831 F.2d 407, 409 (2d Cir. 1987).
In the Second Circuit, a party seeking an award of attorney 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). Attorney fee applications that do not contain such supporting data "should normally be disallowed." Id. at 1154.
In prosecuting this action against Beauty Salon Supply, Cablevision engaged the service of the law firm Lefkowitz, Louis & Sullivan, L.L.P. Jennean R. Lee, Esq., an attorney with that firm, submitted an affirmation to the Court setting forth: (a) the names of the attorneys who worked on this matter; (b) the professional experience of those persons; (c) the number of hours each attorney devoted to this action and the nature of the work each person performed; and (d) the hourly rate at which each was compensated.
Contemporaneous time records for the relevant law firm personnel were also submitted to the Court. The time records indicate that a portion of the work performed by these individuals in connection with prosecuting this action pertained to the defendant Marcus Brown. Under the circumstances, it would be inappropriate to grant attorneys' fees incurred through this aspect of the legal services provided by the law firm. Attorneys' fees incurred through work performed by law firm personnel in connection with prosecuting this action against Beauty Salon Supply, insofar as such fees are clearly indicated in the time records submitted to the Court, are as follows:
William B. Jung, Esq.: 1.10 hours at $165 per hour
Jennean R. Lee, Esq.: 10.40 hours at $145 per hour
Based upon the nature of this case, the Court's review of the submissions by Cablevision, which outline the services performed by counsel, and the Court's understanding of the hourly rates charged by private law firms in the community, the Court concludes that $1,689.50 in attorneys' fees were reasonably incurred by Cablevision in connection with prosecuting this action against Beauty Salon Supply. Plaintiff also seeks to recover $150 incurred in filing fees and in serving the defendant with the Summons and Complaint. This request is reasonable and should be granted.
For the reasons set forth above, I recommend an award to Cablevision of $4,596.80 for damages, costs and attorneys' fees incurred in prosecuting this action against Beauty Salon Supply.
Plaintiff shall serve defendant Beauty Salon Supply with a copy of this Report and Recommendation and shall submit proof of service to the Court.
V. FILING OBJECTIONS TO THIS REPORT AND RECOMMENDATION
Pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure, the parties have ten (10) days from service of the Report to file written objections. See also Fed R. Civ. P. 6. Such objections, and any responses to objections, shall be filed with the Clerk of Court, with courtesy copies delivered to the chambers of the Honorable Gerard E. Lynch, United States District Judge, 40 Centre Street, Room 803, New York, New York 10007, and to the chambers of the undersigned, 40 Centre Street, Room 540, New York, New York 10007. Any requests for an extension of time for filing objections must be directed to Judge Lynch. FAILURE TO FILE OBJECTIONS WITHIN TEN (10) DAYS WILL RESULT IN A WAIVER OF OBJECTIONS AND WILL PRECLUDE APPELLATE REVIEW. See Thomas v. Arn, 474 U.S. 140 (1985); IUE AFL-CIO Pension Fund v. Herrmann, 9 F.3d 1049, 1054 (2d Cir. 1993); Frank v. Johnson, 968 F.2d 298, 300 (2d Cir. 1992); Wesolek v. Candair Ltd., 838 F.2d 55, 57-59 (2d Cir. 1998); McCarthy v. Manson, 714 F.2d 234, 237-38 (2d Cir. 1983).