United States District Court, S.D. New York
May 5, 2004.
CABLEVISION SYSTEMS NEW YORK CITY CORPORATION, Plaintiff, -against- RAPHIAL EVANGELISTA, Defendant
The opinion of the court was delivered by: KEVIN FOX, Magistrate Judge
REPORT AND RECOMMENDATION
TO THE HONORABLE JOHN E. SPRIZZO, UNITED STATES DISTRICT JUDGE
In this action, Cablevision Systems New York City Corporation
("Cablevision") alleges that the defendant: (1) engaged in the sale and
distribution of "pirate" converter-decoder devices ("pirate decoding
devices"), in violation of 47 U.S.C. § 553(a)(1) and 605(e)(4); and (2)
used one or more of these "pirate" decoding devices to intercept
Cablevision's premium and pay-per-view programming services without
Cablevision's authorization and without payment of the requisite fee to
Cablevision, in violation of 47 U.S.C. § 553(a)(1) and 605(a).
Upon defendant Raphial Evangelista's ("Evangelista") failure to file an
answer or otherwise respond to the complaint, your Honor ordered that a
default judgment be entered against him. 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
The Court directed Cablevision to serve and file 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. The Court also
directed Evangelista to serve and file any opposing memoranda, affidavits
and exhibits, as well as any alternative findings of fact and conclusions
of law he deemed appropriate. The defendant did not file any papers in
opposition to plaintiff's submissions.
Plaintiff's submissions aver that it is entitled to $50,000 in
statutory damages and $1,622.50 in costs and attorneys' fees. For the
reasons that follow, I recommend that Cablevision be awarded $47,671.10:
statutory damages pursuant to 47 U.S.C. § 605 in the amount of
$46,048.60, attorneys' fees in the amount of $1,442.50, and costs in the
amount of $180.
II. BACKGROUND AND FACTS
When a defendant defaults in an action, by failing to plead or
otherwise defend against a complaint, the defendant is deemed to have
admitted every well-pleaded allegation of the complaint 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). In addition, the plaintiff is entitled to all
reasonable inferences from the evidence presented. See Au Bon Pain Corp.
v. Artect, Inc., et al., 653 F.2d 61, 65 (2d Cir. 1981). Based upon the
submissions made by the plaintiff, the complaint filed in the instant
action, and the Court's review of the entire court file in this action,
the following findings of fact are made:
Cablevision is a corporation which is duly registered to do business in
New York State and has its principal offices at 1111 Stewart Avenue,
Bethpage, New York. See Plaintiff's Memorandum of Law in Support of
Inquest ("Plaintiff's Mem."), at 2. Evangelista is an individual having a residence at 2274 Grand Concourse Boulevard, Apt.
1D, Bronx, New York. See Id. Pursuant to a franchise awarded by the
political subdivisions of New York state, Cablevision constructs, operates
and maintains cable television systems in parts of New York City,
including Bronx County, where the defendant resides. See Affidavit of
Chuck Carroll in Support of Inquest ("Carroll Aff."), ¶ 2, at 1.
Cablevision offers cable television services to subscribers who request
and pay for them. See Id. 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 Id., ¶ 3, at 1-2. "Family" service is a higher
level of service to which a customer can subscribe at a monthly rate.
With that level of service, he or she can receive all of Cablevision's
programming services, including all of those offered in the Basic service
package. However, premium and pay-per-view programming services are
excepted. See Id. "Optimum" service is a level of service provided which
includes all programming available under "Family" service plus certain
premium stations. See Id.
Cablevision's residential subscribers may also elect to subscribe to
one or more premium services such as Cinemax, Home Box Office and
Showtime, for an additional monthly charge per service, and may elect to
order pay-per-view programming services. Pay-per-view programming
includes movies and sporting events, a fee for which is charged on a per
event basis. See Id., ¶¶ 4, 5, at 2.
Premium services range in price from $1.95 to $14. 95 per month per
service. See Id. ¶ 4, at 2. The full range of Cablevision's premium
programming channels, not including pay-per-view events, is offered at an average cost to a residential subscriber of
approximately $80.95 per month. See Id. The pay-per-view service includes
selections which typically range in price between approximately $4.50 and
$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 via
subscription agreements. Cablevision agrees to provide the programming
services requested by a subscriber in return for the subscriber's
agreement to pay for the same on a monthly basis. See Id., ¶ 6, at 2.
Cablevision's subscribers pay a monthly fee for the specific level and
amount 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 which that subscriber
has selected and paid for. See Id., ¶ 7, at 3.
As part of its cable service, Cablevision provides each of its
subscribers with a piece of 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 which he or she
has selected, purchased, and is thereby 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, including all of its premium and pay-per-view programming, from
orbiting satellites and local radio towers. See Id., ¶ 9, at 3. 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. See Id. Scrambling is a principal security measure used
by Cablevision and other cable television operators to protect their
programming services against unauthorized reception.
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, at 4-5.
Evangelista became a Cablevision subscriber on September 26, 1997, and
subscribed to the Family level of service. See Id., ¶ 18, at 6.
Defendant's residence was provided with an authorized converter-decoder
on that date. On April 13, 1999, Evangelista downgraded his service to
Cablevision's Broadcast Basic service with HBO, for which he pays $28.05
per month. See Id.
On October 5, 1998, Evangelista purchased five (5) "pirate"
converter-decoders from D Electronics,*fn1 permitting the viewing of
Cablevision's premium and pay-per-view programming services without
authorization. See Id., ¶ 19, at 6. There is no legitimate function or
purpose on a cable system for decoders which have been designed to
descramble all scrambled programming, including pay-per-view events. The
sole purpose of such devices is to enable their users to receive
unauthorized cable television programming without having to make payment
to a cable operator for those services. The quantity of devices purchased
by the defendant is inconsistent with personal use and entirely
consistent with the conduct of a distributor. Therefore, the number of
"pirate" decoder-converters purchased by defendant demonstrates his intent to distribute and/or sell such devices on the black market.
The only conceivable motive the defendant could have had in selling this
equipment was his direct or indirect commercial advantage or personal
financial gain. See Id., ¶¶ 21, 22, at 6.
III. CONCLUSIONS OF LAW
47 U.S.C. § 553*fn2 and 605*fn3 each prohibits 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 In addition, 47 U.S.C. § 553*fn5 and 605*fn6 each prohibits
the unauthorized reception of cable television programming services and the
sale of "pirate" cable television devices. See Sykes, 75 F.3d at 133.
Cablevision's premium and pay-per-view programming is sent to
Cablevision from orbiting satellites. 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).
Evangelista purchased five (5) "pirate" converter-decoders from D
Electronics. These devices would permit one to view Cablevision's premium
and pay-per-view programming services without authorization. See Carroll
Aff., ¶¶ 20-21, at 6. The large number of devices purchased permits an
inference to be drawn that defendant's intent was to distribute and/or
sell the "pirate" devices on the black market. As the court explained in
Cablevision Systems Corp. v. De Palma, No. 87 Civ. 3528, 1989 WL 8165, at
*4 (E.D.N.Y. Jan. 17, 1989):
While [plaintiff] did not introduce direct evidence
that the defendant sold or redistributed these boxes,
the evidence taken as a whole in light of common
experience compels the conclusion that such an
activity is the only possible result. When a person
buys or imports goods in such large quantities that
the overabundance renders the extra goods useless to
that person, the only natural conclusion to be drawn is that that person purchased
those goods with the intent of selling or distributing
them into the marketplace.
In any event, even if an alternative inference could be drawn,
defendant's default has left the Court without any factual basis upon
which to draw any such alternative inference respecting the use to which
defendant put the large number of converter-decoders he purchased. See
Time Warner Cable of New York City v. Browne, No. 00 Civ. 0412, 2000 WL
567015, at *1 (S.D.N.Y. May 10, 2000). In light of the above, the Court
finds that defendant sold and/or distributed pirate devices to aid in the
theft of Cablevision's programming services, in violation of
47 U.S.C. § 553(a)(1) and 605(e)(4).
Cablevision possesses "proprietary rights" in the communications which
Evangelista intercepted and, thus, 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
47 U.S.C. § 553 and 605, 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 605 and 553, an aggrieved cable operator is
entitled to elect to recover damages under section 605 in consideration
of section 605's higher damages award. See Sykes, 75 F.3d at 127;
Barnes, 13 F. Supp.2d at 548.
Cablevision has elected to recover statutory damages against defendant
instead of actual damages. For the sale of "pirate" decoding devices,
47 U.S.C. § 605(e)(3)(C)(i)(II) provides that, "for each violation of
paragraph (4) of this subsection involved in the action 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." For the use of a "pirate" decoding device to
intercept illegally Plaintiff's services, statutory damages from $1,000
to $10,000 per violation may be recovered. See
47 U.S.C. § 605(e)(3)(C)(i)(II).
Defendant purchased five (5) "pirate" decoding devices; one alone would
provide its user with all of Cablevision's premium and pay-per-view
programming services. Therefore, the Court finds that a rational inference
may be drawn that defendant used one "pirate" decoding device at his
residence to intercept Plaintiff's cable television programming services
and sold the remaining four (4) devices. Accordingly, the Court finds
that plaintiff is entitled to an award of $40,000, pursuant to
47 U.S.C. § 605, for defendant's sale of the four (4) "pirate" decoding
devices. See Browne, 2000 WL 567015, at *1 (granting default judgment and
awarding $10,000 for each pirate device allegedly distributed by
Plaintiff also requests that it be awarded the maximum statutory
damages, $10,000, for defendant's use of a "pirate" decoding device to
intercept illegally Cablevision's cable television programming services.
However, for the reasons that follow, the Court finds that an award of
that amount would be inappropriate.
Defendant purchased the five (5) "pirate" converter-decoder devices on
October 5, 1998. Defendant became a Cablevision subscriber on September
26, 1997, subscribing to the Family level of service. Thereafter, on
April 13, 1999, defendant downgraded to Cablevision's Broadcast Basic
service with HBO, for which he pays $28.05 per month. Therefore, the
Court finds that Plaintiff's unauthorized usage encompassed approximately
34 months (from the purchase of "pirate" converter decoder devices on
October 5, 1998, until August 15, 2001, the date on which the instant
complaint was filed). The record reflects that the full range of Cablevision's premium
programming service, not including pay-per-view events, is offered at an
average cost to a residential subscriber of approximately $80.95 per
month. Therefore, it is reasonable to conclude that, beginning on October
5, 1998, the defendant was receiving unauthorized free access to
programming valued at $52.90 per month. This unauthorized usage continued
for 34 months, until August 15, 2001. Accordingly, $1,798.60 in unpaid
premium programming fees were lost by Cablevision.
The aggregate value of each pay-per-view event offered over a typical
month, assuming each pay-per-view event is viewed only once, is hundreds
of dollars per month. However, to conclude that Evangelista watched each
and every pay-per-view selection offered, on each day for the 34-month
period, is unreasonable.
Cablevision's pay-per-view events range in costs from approximately
$4.50 to $50. Based on these costs, the Court finds that an average value
of $125 per month for 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, $4,250
is the reasonable value of the pay-per-view selections plaintiff might
have viewed without making the requisite payment to Cablevision. This sum
takes into consideration Evangelista's 34 months of unauthorized usage.
In reaching this determination, the Court has also considered
Evangelista's failure to appear in this action; it illustrates his
indifferent attitude toward the communications law. See Cablevision
Systems New York City Corp. v. Faschitti, No. 94 Civ. 6830, 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 plaintiff is entitled to an award of
$6,048.60, pursuant to 47 U.S.C. § 605, for defendant's use of a
"pirate" decoding device to intercept illegally Plaintiff's cable
television programming services.
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. 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 Association 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 Evangelista, Cablevision engaged the
service of the law firm Lefkowitz, Louis & Sullivan, L.L.P. Shaun K.
Hogan, Esq. ("Hogan"), an attorney with that firm, submitted an affidavit
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. In addition, Hogan averred that certain work
done by attorneys and paralegals of the law firm was performed at a set
fee, pursuant to a fee schedule previously agreed upon by plaintiff and
Contemporaneous time records for the relevant law firm personnel were
also submitted to the Court. The time records indicate that plaintiff
incurred attorney fees through the work performed by the following law
Shaun K. Hogan, Esq.: 0.40 hours @ $165 per hour William E.
Primavera, Esq.: Draft summons and complaint @ $300 Alfonso N. Cava,
Paralegal: 0.90 hours @ $85 per hour Draft default papers @ $200
Janine Zabbia, Paralegal: Draft papers re damages @ $800
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 finds that $1,442.50 in
attorneys' fees were reasonably incurred by Cablevision in connection
with prosecuting this action against Evangelista. Plaintiff seeks to
recover $180 in costs: $150 incurred in filing fees and $30 incurred in
serving the defendant with the summons and complaint. This request is
reasonable and should be granted.
For the reasons set forth above, the Court recommends an award to
Cablevision of $47,671 10 for damages, costs and attorneys' fees incurred
in prosecuting this action against Evangelista.
* * *
Plaintiff shall serve Evangelista with a copy of this Report and
Recommendation and shall submit proof of service to the Court.
V. FILING OBJECTIONS TO THIS REPORT AND
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 John E. Sprizzo, United States District Judge, 40 Centre
Street, Room 2201, 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 Sprizzo. 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. Hermann,
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).