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ENTERTAINMENT BY J&J INC. v. FRIENDS II

United States District Court, Southern District of New York


April 25, 2003

ENTERTAINMENT BY J&J, INC., PLAINTIFF, AGAINST FRIENDS II, INC., D/B/A FRIENDS II, AND ROBIN O'FARRILL AND MINE RIVERA, DEFENDANTS.

The opinion of the court was delivered by: Ronald L. Ellis, United States Magistrate Judge

REPORT AND RECOMMENDATION
I. INTRODUCTION

This matter was referred for an inquest on damages on October 16, 2002, following an entry of final judgment by default as to defendant Friends II, Inc. d/b/a Friends II ("Friends"), by The Honorable John B. Sprizzo on June 28, 2002.*fn1 Based on the following facts presented to the Court by way of declaration and memorandum of law by the plaintiff Entertainment by J&J, Inc. ("Entertainment"), the Court recommends that Entertainment be awarded $6,000 in statutory damages, plus $2,193.75 in attorney's fees and $237 in costs, for a total of $8,430.75.

II. BACKGROUND

On January 25, 2002, Entertainment filed suit alleging violations of 47 U.S.C. § 553 and 605 by way of Friends' willfull interception and misappropriation of a closed circuit airing of the April 29, 2000 boxing match between Lennox Lewis and Martin Grant. See Memorandum of Law in Support of Plaintiff's Request of a Judgment by Default ("Pl. Mem.") at 3. Friends was served with the complaint on or about February 5, 2002, but failed to file an answer. Id. On March 29, 2002, Entertainment filed a motion for a default judgment against Friends, which the Court granted on June 27, 2002. Accordingly, the allegations of the amended complaint are now accepted as true. See Au Bon Pain Corp. v. Artect, Inc., 653 F.2d 61, 65 (2d Cir. 1981). Entertainment held the rights to show the closed-circuit telecast of the April 29, 2000 championship boxing match ("the Event") between Lennox Lewis and Michael Grant at closed-circuit locations throughout New York. See Affidavit of Skip M. Klauber, plaintiff's attorney, in Support of Plaintiff's Motion for Default Judgment ("Klauber Aff.") at ¶¶ 3-4. Commercial establishments, such as bars, lounges, and restaurants could air the Event only if they were contractually authorized by Entertainment to do so. Id. at ¶ 5. Commercial establishments were required to pay Entertainment a sublicense fee, and to charge its patrons an admission fee for viewing the Event. Id. at ¶ 7.

In order to prevent the unauthorized interception and broadcast of the telecast, Entertainment's satellite transmission was electronically coded or scrambled. Id. at ¶ 6. Entertainment provided only contractually authorized commercial establishments with the decoding equipment and satellite coordinates necessary to receive the signal and broadcast the Event. See id. Friends did not contract with Entertainment to receive and broadcast the Event. See id. at ¶¶ 8-9. On the day of the broadcast, Entertainment's investigator observed approximately thirty-five patrons at Friends while the Event was being unlawfully broadcast. See Affidavit of Andre Arce investigator for plaintiff, in Support of Plaintiff's Motion for Default Judgment ("Arce Aff.").

III. DISCUSSION

A. Statutory Framework

47 U.S.C. § 553(a)(1) provides:

No person shall intercept or receive or assist in intercepting or receiving 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.
Subsection (b) prescribes criminal penalties for willful violations, and subsection (c) creates a civil cause of action for "[a]ny person aggrieved by any violation of subsection (a)(1) of this section." Civil remedies include injunctive relief, damages, costs, and attorney's fees. 47 U.S.C. § 553(c)(2). As to damages, the party aggrieved may prove "actual damages" as specified in subsection (c)(3)(A)(I), or may elect 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." Under either method of computation, the Court may increase the awarded amount by up to $50,000 if the plaintiff proves willfulness or self-gain by the defendant, or decrease the amount if defendant proves "he was not aware and had no reason to believe that his acts constituted a violation." 47 U.S.C. § 605(c)(3)(B)and (C).

47 U.S.C. § 605(a) provides, in relevant part:

No person not being authorized by the sender shall intercept any radio communication and divulge or publish the existence, contents, substance, purport, effect, or meaning of such intercepted communication to any person. No person not being entitled thereto shall receive or assist in receiving any interstate or foreign communication by radio and use such communication (or any information therein contained) for his own benefit or for the benefit of another not entitled thereto.
Subsections (e)(1) and (2) impose criminal penalties, such as fines and imprisonment, for willful violations, and subsection (e)(3) creates a civil right of action for any aggrieved party. 47 U.S.C. § 605 (e)(3)(A). Prescribed civil remedies include injunctive relief, attorney's and costs. 47 U.S.C. § 605(e)(3)(B)(i) and (iii). Persons aggrieved may also receive either actual damages, § 605(e)(3)(C)(i)(I), or "statutory damages for each violation of (a) of this section involved in the action in a sum 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). In provisions that correspond to § 553(c)(3)(B)and(C), the court may increase the award for damages by up to $100,000, if the plaintiff proves willfulness or intentional self-gain, or decrease the award amount if the defendant proves innocence. 47 U.S.C. § 605(E)(3)(c)(ii) and (iii).

B. Friends' Liability

Telecast of the Event was transmitted by satellite communication. See Klauber Aff. at ¶ 6. Therefore, both 47 U.S.C. § 553, concerning cable system communications, and § 605, concerning radio communications, protect Entertainment's rights to the satellite signal. Thus, Friends violated both statutory sections when it illegally intercepted the satellite signal and displayed the Event without Entertainment's authorization. See Int'l Cablevision, Inc. v. Sykes, 75 F.3d 123, 133 (2d Cir. 1996) ("Sykes II"); Time Warner Cable v. U.S. Cable T.V., Inc., 920 F. Supp. 321, 328-29 (E.D.N.Y. 1996). Entertainment is 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 § 605 and § 553 of the Communications Act, a plaintiff may recover damages under only one of those sections. Time Warner Cable v. Barnes, 13 F. Supp.2d 543, 548 (S.D.N.Y. 1998); New Contenders, Inc. v. Diaz Seafood Corp., 1997 WL 538827, at *1 (S.D.N.Y. 1997); American Cablevision of Queens v. McGinn, 817 F. Supp. 317, 320 (E.D.N.Y. 1993). An aggrieved cable operator is entitled to elect to recover damages under § 605 in consideration of § 605's higher damage awards. International Cablevision, Inc. v. Sykes, 997 F.2d 998, 1007 (2d Cir. 1993); Sykes II, 75 F.3d at 127.

Entertainment has elected to recover money damages against Friends in the form of statutory damages, rather than actual damages. Memorandum of Law in Support of Plaintiffs's Motion for Default Judgment ("Pl. Mem.") at 7. Entertainment seeks the maximum statutory amount of $10,000 pursuant to both § 553 and § 605. See Pl. Mem. at 14-15. Plaintiff also seeks additional damages of up to $50,000 for defendant's willful conduct. See Pl. Mem. at 18.*fn2 Since Entertainment seeks the maximum award possible under the statutes and may recover only under one of those sections, this Court recommends that it be awarded damages pursuant to § 605.

C. Calculation of Damages

A court has discretion in determining the amount of damages to award pursuant to § 605. See 47 U.S.C. § 605(e)(3)(C)(i)(II) (providing that an award should be granted "as the court considers just"). Accordingly, courts in the Second Circuit differ on how they award statutory damages. Some courts award damages based on the number of patrons in the establishment at the time of the violation. See, e.g., Time Warner Cable v. Googies Luncheonette, 77 F. Supp.2d 485, 490 (S.D.N.Y. 1999) (awarding $50 per patron); Time Warner Cable v. Taco Rapido Restaurant, 988 F. Supp. 107, 111 (E.D.N.Y. 1997) (awarding $50 per patron); New Contenders, Inc., 1997 WL 538827, at *2 (awarding $600 per patron and taking into account defendant's profits from the sale of food and drink); Cablevision Systems Corp. v. 45 Midland Enterprises, Inc., 858 F. Supp. 42, 45 (S.D.N.Y. 1994) (awarding $50 per patron). Others award a flat amount in damages. See, e.g., King Vision Pay-Per-View Corp. v. Papacito Lidia Luncheonette, Inc., 2001 WL 1558269, at *2 (S.D.N.Y. 2001) (awarding $20,000); Kingvision Pay-Per-View, Ltd. v. Jasper Grocery, 152 F. Supp.2d 438, 442 (S.D.N.Y. 2001) (awarding $5,000 in damages).

In support of its application for damages, Entertainment has presented evidence by memorandum and affidavits regarding Friends, its capacity, and the number of patrons present on April 29, 2000. Entertainment based its sublicense fee on a minimum capacity of seventy-five patrons at $20 per potential patron. See Klauber Aff. at ¶ 7 and Arce Aff. Thus, even though only thirty-five patrons were on defendant's premises during the broadcast of the Event, Entertainment would have charged Friends a sublicense fee of $1,500. See Arce Aff. and Pl. Mem. at 9. Because Entertainment submitted evidence regarding the number of patrons viewing the Event and Entertainment's fees, I find it appropriate to use the per patron method of assessing damages.

The affidavit of Entertainment's investigator asserts that Friends has a capacity of at least seventy-five people, and on the night in question, there were approximately thirty-five patrons present. See Arce Aff. Because Entertainment's license fees are based on a minimum of seventy-five patrons at $20 per patron, Entertainment lost $1,500.

While the $1,500 represents the lost sublicense fee by Entertainment, it is insufficient to deter Friends from committing the wrongful acts again. There would be no incentive to legally air closed-circuit programming if the penalty were merely the amount that should have been paid. See Cablevision Systems of New York City Corp. v. Rosa, 2002 WL 1446942, at *5 (S.D.N.Y. 2002) (citing Cablevision Systems New York City Corp. v. Faschitti, 1996 WL 486689, at *2 (S.D.N.Y. 1996) (finding defendant's willful violation of the statute and failure to appear in the action as basis for enhancing the statutory damages award in order to deter such future behavior)). Indeed, the statute provides an incentive by setting a minimum damage award of $1,000 to deter prospective violators. I find, therefore, that it is appropriate to assess damages at twice the amount of fees that were avoided, and thus, increase the awarded amount to $3,000. See Cablevision Systems New York City Corp. v. Sencion, 2001 WL 1586685, at *2 (S.D.N.Y. 2001); Kingvision Pay-Per-View, Ltd. v. El Rey Del Bistec Y Caridad, Inc., 2001 WL 1586667, at *2 (S.D.N.Y. 2001); CSC Holdings, Inc. v. Ruccolo, 2001 WL 1658237, at *3 (S.D.N.Y. 2001).

Courts also consider several factors in determining whether to enhance a damages award for a defendant's willful violation of 47 U.S.C. § 605. These factors include:

repeated violations over an extended period of time; substantial unlawful monetary gains; significant actual damages to plaintiff; defendant's advertising for the intended broadcast of the event; defendant's charging a cover charge or charging premiums for food and drinks.
Caridad, 2001 WL 1586667, at *2.

Here, as in Caridad, there is no evidence that Friends engaged in illegal piracy in the past, advertised the broadcast of the Event, or charged a premium on food and drinks. See Caridad, 2001 WL 1586667, at *3. By contrast, Friends did impose a cover charge. This alone, however, does not support the large statutory enhancement that Entertainment seeks. Friends only had two twenty-seven inch television sets on which it broadcast the Event. In addition, there is no evidence that Friends greatly profited from airing the Event, since only thirty-five patrons were present during the broadcast. Furthermore, there is no evidence that Friends typically gains much of its revenue from pirated broadcasts. Nonetheless, Friends' actions were willful since it deliberately descrambled the satellite signal to which Entertainment had exclusive rights and gained financially from the food and drinks it sold to its patrons during the Event broadcast. Moreover, Friends' actions demonstrate a complete disregard for the statute. In consideration of all these factors, I find that an enhancement of $3,000, double the initial amount awarded, is appropriate for Friends' willful violation. In sum, the total amount of damages should be $6,000.

D. Attorney's Fees and Costs

The statute provides that the court "shall direct the recovery of full costs, including awarding reasonable attorney's fees to an aggrieved party who prevails." 47 U.S.C. § 605(e)(B)(iii). "The lodestar approach governs the initial estimate of reasonable fees." Grant v. Martinez, 973 F.2d 96, 99 (2d Cir. 1992) (citing Blanchard v. Bergerson, 489 U.S. 87, 94 (1989)). Under this approach, the estimated fee is determined by multiplying the number of hours reasonably expended on the litigation by a rate that is reasonable for attorneys. Id. Although there is a "strong presumption" that the lodestar amount is reasonable, the amount may be adjusted, depending on such considerations as the novelty and difficulty of the issues concerned and the experience and ability of the attorney. See Toys "R" Us, Inc. v. Abir, 1999 WL 61817, at *2 (S.D.N.Y. 1999). Accordingly, the court considers the reasonableness of both the hours expended and the requested rates.

1. Reasonable Hours

In the Second Circuit, a party seeking an award for attorney's fees must support its application by submitting time records that detail "for each attorney, the date, hours expended, and the nature of the work done." New York State Association for Retarded Children. Inc. v. Carey, 711 F.2d 1136, 1154 (2d Cir. 1983). Accordingly, Entertainment has submitted an affidavit by its counsel, Peter G. Rubin, of Frank, Frank, Goldstein & Nager, P.C., accompanied by timesheets and service bills that delineate the nature of the work performed, the date on which it was performed, the hours spent, and the rate requested. See Pl. Mem., Exhibit C. Entertainment seeks $3,250 for attorney's fees, based on 13 hours of work by Mr. Rubin, at a rate of $250 per hour. It also seeks $237 for costs. Id.; Pl. Mem., Exhibits 1-2.

When determining the reasonableness of the hours expended by counsel, the court considers "the value of the work product of the specific expenditures in the client's case." Luciano v. Olsten Corp., 109 F.3d in, 116 (2d Cir. 1997) (citing Lunday v. City of Albany, 42 F.3d 131, 133 (2d Cir. 1985); DiFilippo v. Morizio, 759 F.2d 231, 235 (2d Cir. 1985)). Moreover, the court should reduce the lodestar calculation by any amount of time it deems unreasonable. See Quarantino v. Tiffany & Co., 166 F.3d 422, 425 (2d Cir. 1998) (citing Hensley v. Eckerhart, 461 U.S. 424, 434 (1983)). Upon review of Mr. Rubin's timesheets, I find that counsel's time spent on the instant case to be reasonable, and therefore recommend that he be awarded fees based on his 13 hours of work.

2. Reasonable Rate

In determining a reasonable hourly rate, the court should consider the rates for legal services, "prevailing in the community for similar services by lawyers of reasonably comparable skill, experience, and reputation." Gierlinger v. Gleason, 160 F.3d 858, 882 (2d Cir. 1998) (quoting Blum v. Stevenson, 465 U.S. 886, 895 n. 11 (1994)). In addition, the court may also rely on its own knowledge of hourly rates charged in private firms to determine what the reasonable attorney's rates are in the relevant community. Miele v. N.Y. State Teamsters Conf. Pens. & Retirement Fund, 831 F.2d 407, 409 (2d Cir. 1987). For purposes of determining the fee, the relevant community is the judicial district in which the trial court sits. Thus, the relevant community is the Southern District of New York. In re Agent Orange Product Liability Litig., 818 F.2d 226, 232 (2d Cir. 1987).

Mr. Rubin has the burden of showing that his rate is reasonable. See Hensley, 461 U.S. at 433; Blum, 465 U.S. at 896 (requiring "satisfactory evidence-in addition to the attorney's own affidavits"). However, counsel has submitted no information concerning the rate he normally charges for his time or concerning his qualifications and experience. See Pl. Mem., Exhibit C and Exhibits 1-2. While in this district the hourly rate of $250 has been approved for partners and senior attorneys, the rate is slightly less for junior attorneys. See Weinberger v. Provident Life and Cas. Ins. Co., 1999 WL 608790, at *2 (S.D.N.Y. 1999) (citations omitted); Knigge ex el. Corvese v. Corvese, 2001 WL 883644, at *3 (S.D.N.Y. 2001) (citations omitted). Accordingly, I recommend that Mr. Rubin's hourly rate be adjusted from $250 to $200.

However, Mr. Rubin should not be compensated $200 per hour for any work performed which would typically be performed by an administrative assistant or paralegal. For example, Mr. Rubin spent 1.25 hours personally filing the complaint and forwarding the papers to the process server, the client, and the judge; .50 hours personally filing the dismissal papers; .50 hours personally speaking to the process server; and 1.0 hours preparing and filing the "Notation of Default." See Pl. Mem., Exhibits 1-2. These expenses represent services that may not be billed at an attorney's hourly rate. See Bick v. City of New York, 1998 WL 190238, *31 (S.D.N.Y. 1998) (reimbursing attorney at a paralegal rate for hours spent serving a complaint and subpoenas); Bridges v. Eastman Kodak Co., 1996 WL 47304, *7 (S.D.N.Y. 1996) (finding that "filing, delivery, and service of papers" are clerical and administrative tasks that may not be billed at attorneys' rates); Loper v. New York City Police Department, 853 F. Supp. 716, 720 (S.D.N.Y. 1994) (finding $250 an hour excessive compensation for clerical work and therefore, reimbursing attorney at paralegal rate). Therefore, I recommend that Mr. Rubin be reimbursed for the 3.25 hours of work specified above at the paralegal rate of $75 per hour. See e.g., Vernon v. Port Authority of New York and New Jersey, 220 F. Supp.2d 223, 230 (S.D.N.Y. 2002) (citing Marisol A. ex el. Forbes v. Guiliani, 111 F. Supp.2d 381, 388 (S.D.N.Y. 2000) (finding $75 per hour for paralegals reasonable)).

In light of the aforementioned circumstances, I recommend that 3.25 hours be billed at the legal paralegal rate of $75 per hour for a total of $243.75, and that 9.75 hours be billed to Mr. Rubin at a rate of $200 per hour for a total of $1,950. In sum, attorney's fees should be awarded in the amount of $2,193.75. Entertainment also seeks costs totaling $237, which include $150 for filing fees and $87 for process server fees. I find these costs to be reasonable and recommend they be awarded to Entertainment.

III. CONCLUSION

For willful violation of § 605(a), 1 recommend that defendant Friends pay $6,000 in statutory damages, plus $2,193.75 in attorney's fees and $237 in costs, for a total of $8,430.75.

Pursuant to Rule 72, Federal Rules of Civil Procedure, the parties shall have ten (10) days after being served with a copy of the recommended disposition to file written objections to this Report and Recommendation. Such objections shall be filed with the Clerk of the Court and served on all adversaries, with extra copies delivered to the chambers of the Honorable John E. Sprizzo, 40 Foley, Room 2201, and to the chambers of the undersigned, 500 Pearl Street, Room 1970. Failure to file timely objections shall constitute a waiver of those objections both in the District Court and on latereal to the United States Court of Appeals. See Thomas v. Arn, 474 U.S. 140, 150 (1985); Small v. Secretary of Health and Human Services, 892 F.2d 15, 16 (2d Cir. 1989) (per curiam); 28 U.S.C. § 636(b)(1) (West Supp. 1995); Fed.R.Civ.P. 72, 6(a), 6(e).


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