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United States District Court, S.D. New York

June 30, 2004.

KINGVISION PAY-PER-VIEW LTD. as Broadcast Licensee of the March 1, 2003 Jones/Ruiz, Program, Plaintiff,
CARMEN CARDONA, et. ano, Defendants.

The opinion of the court was delivered by: FRANK MAAS, Magistrate Judge

[fn*] This Report and Recommendation was prepared with the assistance of Laureve Blackstone, a first-year student at Brooklyn Law School.

I. Introduction

In this action, plaintiff Kingvision Pay-Per-View, Ltd. ("Kingvision") alleges that, during the early morning hours of March 2, 2003, defendant Los Amigos Del Encanto Corp., d/b/a Los Amigos Del Encanto, a/k/a Amigo's Del Encanto Sports Bar ("Los Amigos"), and its principal, defendant Carmen Cardona ("Cardona"), illegally intercepted satellite signals that were being used by Kingvision to transmit a boxing match between two boxers named Jones and Ruiz (the "Program"), thereby violating the Cable Communications Policy Act ("Communications Act"), as amended, 47 U.S.C. § 553(a)(1), 605(a) and 605(e)(4). On November 19, 2003, Kingvision voluntarily discontinued its action against Cardona insofar as she was named in her "individual capacity." (See Docket No. 8).*fn1 Thereafter, a default judgment was entered against Los Amigos, (Docket No. 9), and Your Honor referred the matter to me for an inquest. (Docket No. 12).

  By order dated January 7, 2004, I directed Kingvision to serve and file an inquest memorandum by February 9, 2004, accompanied by supporting affidavits and exhibits, setting forth its proof of damages, as well as proposed findings of fact and conclusions of law. (Docket No. 13). The order directed Los Amigos to respond by February 23, 2004. (Id.). While Kingvision's papers were timely filed, Los Amigos did not submit any opposition papers.

  For the reasons set forth below, I recommend that Kingvision be awarded judgment against defendant Los Amigos in the amount of $12,165 consisting of $12,000 in statutory damages and $165 in costs.

  II. Standard of Review

  In light of Los Amigos' default, Kingvision's well-pleaded allegations concerning issues other than damages must be accepted as true. 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); Time Warner Cable of New York City v. Barnes, 13 F. Supp.2d 543, 547 (S.D.N.Y. 1998); Cablevision Sys. New York City Corp. v. Lokshin, 980 F. Supp. 107, 111 (E.D.N.Y. 1997).

  Additionally, although a plaintiff seeking to recover damages against a defaulting defendant must prove its claim through the submission of evidence, the Court need not hold a hearing as long as (i) it has determined the proper rule for calculating damages on the claim, see Credit Lyonnais Secs. (USA), Inc. v. Alcantara, 183 F.3d 151, 155 (2d Cir. 1999), and (ii) the plaintiff's evidence establishes, with reasonable certainty, the basis for the damages specified in the default judgment. See Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 111 (2d Cir. 1997); Fustok v. ContiCommodity Servs., Inc., 873 F.2d 38, 40 (2d Cir. 1989); see also Tamarin v. Adam Caterers, Inc., 13 F.3d 51, 53-54 (2d Cir. 1993) (inquest on damages without hearing improper where based upon "single affidavit only partially based upon real numbers").

  III. Factual Findings

  A. Jurisdiction

  This action arises under 47 U.S.C. § 553 and 605. The Court therefore has jurisdiction pursuant to 28 U.S.C. § 1331.

  B. Los Amigos' Illegal Broadcast of the Program

  Kingvision had a license to distribute the Program on March 1, 2003, via closed-circuit television and encrypted satellite signal. (Compl. ¶ 12). Among the rights granted to Kingvision was the right to allow other entities to broadcast the Program. (Id. ¶ 13). During the early morning hours of March 2, 2003, Kingvision's auditor, Keith Rauscher, visited the Los Amigos facility. (See "Piracy" Aff. of Keith Rauscher, sworn to on Mar. 7, 2003, at 1). Rauscher observed about twenty customers at Los Amigos who were watching the Program on a television set. (Id. at 2). Los Amigos was not authorized to receive the Program. (See Compl. ¶¶ 3, 8).

  IV. Discussion

  A. Los Amigos' Violations of 47 U.S.C. § 553 and 605

  Sections 553*fn2 and 605*fn3 of Title 47 of the United States Code prohibit the unauthorized interception and reception of cable programming services. Time Warner Cable of N.Y.C. v. Barnes, 13 F. Supp.2d 543, 547-48 (S.D.N.Y. 1998) (citing Int'l Cablevision, Inc. v. Sykes, 75 F.3d 123, 133 (2d Cir. 1996)); Cablevision Sys. N.Y.C. Corp. v. Lokshin, 980 F. Supp. 107, 112 (E.D.N.Y. 1997) ("In contrast to [S]ection 553, which by its statutory language applies only to transmissions via cable systems, [S]ection 605(a) applies to `the interception of cable-borne, as well as over-the-air, pay television' where cable-borne transmissions originate as satellite transmissions. . . . Thus, when pay television programming is transmitted over both cable and satellite mediums, both statutes apply. . . ." (quoting Sykes, 75 F.3d at 130)). 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 one of those sections only. Sykes, 75 F.3d at 127; Barnes 13 F. Supp.2d at 548; Am. Cablevision of Queens v. McGinn, 817 F. Supp. 317, 320 (E.D.N.Y. 1993). An aggrieved cable operator may, however, elect to recover damages under Section 605 in consideration of its higher damages award. Barnes, 13 F. Supp.2d at 548.

  Kingvision's Program, which Los Amigos intercepted, originated via satellite uplink and was sent to Kingvision via satellite signal. (See Compl. ¶ 12). Although Kingvision suggests that establishments like Los Amigos frequently use a "black box" or "illegal cable drop or splice" from a nearby apartment or commercial location, (see Aff. of Donna K. Westrich, sworn to on July 22, 2003, ¶ 9), this is sheer supposition since the signal could also have come from an illegal dish. In any event, this is of little moment since Los Amigos plainly violated Section 605(a). Moreover, Kingvision possesses "proprietary rights" in the communications that Los Amigos intercepted without authorization, and therefore is a "person aggrieved" within the meaning of 47 U.S.C. § 553(c)(1) and 605(e)(3)(A).

  Section 605(e)(3)(C)(i)(II) of Title 47, United States Code, allows statutory damages for "each violation of subsection (a) of this section . . . in a sum not less than $1,000 or more than $10,000, as the court considers just. . . ." Additionally, if a court finds that the statute was violated "willfully and for the purpose of commercial advantage or private financial gain," it may, in its discretion, award an additional sum, up to $10,000. Id. § 605(e)(3)(C)(ii).

  Kingvision seeks the maximum statutory damages of $10,000, plus enhanced damages for wilfulness in the amount of $100,000, or a total of $110,000. (See Kingvision Mem. at 7). The damages to be assessed pursuant to Section 605 rest within the sound discretion of the Court. See Home Box Office v. Champs of New Haven, Inc., 837 F. Supp. 480, 484 (D.Conn. 1993); Entertainment by J&J, Inc. v. Mama Zee Restaurant & Catering Services, Inc., No. 01 Civ. 3945 (RR)(SMG), 2002 WL 2022522, at *3 (E.D.N.Y. May 21, 2002). Because the statute provides little guidance on how damages should be assessed, some courts have calculated statutory damages based on the number of patrons in the establishment at the time of the violation. See, e.g. Entertainment by J&J, Inc., v. Friends II, Inc., No. 02 Civ. 585 (JES)(RLE), 2003 WL 1990414 at *3 (S.D.N.Y. Apr. 25, 2003) (awarding $20 per patron based on sublicensing fee per potential patron); Entertainment by J&J, Inc. v. Nina's Restaurant and Catering, 01 Civ. 5483 (KMW)(RLE), 2002 WL 1000286, at *3 (S.D.N.Y. May 9, 2002) (awarding $20 per patron); Time Warner Cable of New York City v. Googies Luncheonette, Inc., 77 F. Supp.2d 485, 490 (S.D.N.Y. 1999) (awarding $50 per patron). Other courts have simply imposed damages in a flat amount. See, e.g., Entertainment by J&J, Inc. v. Suriel, 01 Civ. 11460 (RO), 2003 WL 1090268, at *1 (S.D.N.Y. Mar. 11, 2003) (awarding $11,000); King Vision Pay-Per-View Corp., Ltd. v. Papacito Lidia Luncheonette, Inc., 01 Civ. 7575 (LAK)(AJP), 2001 WL 1558269, at *2 (S.D.N.Y. Dec. 6, 2001) (awarding $20,000); Kingvision Pay-Per-View, Ltd. v. Jasper Grocery, 152 F. Supp.2d 438, 442 (S.D.N.Y. 2001) (awarding $15,000 in total damages).

  In a similar case referred by Your Honor last year, I opted to calculate damages on a per patron basis. See Time Warner Cable of New York City v. Sanchez, No. 02 Civ. 5855 (GBD)(FM), 2003 WL 21744089, at *4 (S.D.N.Y. July 8, 2003). Because there were 32 patrons viewing the boxing match, I calculated the cable operator's damages as $640 (32 x $20), plus the $75 that it would have cost the establishment to subscribe to monthly programming. Id. I further increased the damages award to $1,000 because this was the statutory minimum under Section 605. Id. Finally, I recommended that the cable operator be awarded an additional $5,000 for the defendant's wilfulness. Id.

  Applying a similar analysis here would result in an equally low award. I am persuaded, however, that a somewhat larger award is warranted. In calculating damages in Sanchez, I did not consider the fact that customers who could not watch the program might have had to subscribe to the cable company's service or enhance their level of viewership — generating additional income for the company. While Kingvision provides relatively little information in this regard, it is reasonable to assume that such loses could easily have surpassed $1,000. Additionally, the uncertainty in this area is directly attributable to Los Amigos' default. I therefore recommend that Kingvision be awarded damages under Section 605(e)(3)(C)(i)(II) in the amount of $2,000. In Sanchez, I recommended that the damages be enhanced by $5,000 due to the infringer's wilfulness. In arriving at this amount, I noted that this was the only enhancement that the plaintiff sought. See Sanchez, 2003 WL 21744089 at *3. Kingvision is nevertheless entitled to a sum which will send the message that cable piracy is impermissible. For that reason, notwithstanding Sanchez, I recommend that Kingvision be awarded an additional $10,000 in this case, for a total of $12,000.

  B. Attorneys' Fees

  Section 605 authorizes a court to "direct the recovery of full costs including the award of reasonable attorneys' fees to an aggrieved party who prevails." 47 U.S.C. § 605(e)(3)(B)(iii). In this case, however, Kingvision has not sought attorney's fees in its Inquest Memorandum.

  C. Costs

  Kingvision seeks to recover its investigative costs in the amount of $137.50, which represents one-half of Mr. Rauscher's fee. (See Aff. of Julie C. Lonstein, sworn to on November 3, 2003 ("Lonstein Aff."), ¶ 21). In federal court, the taxable costs for which a party may seek reimbursement include the cost of deposition and trial transcripts, service of process fees, witness fees and mileage, interpreting fees, and certain small photographs. See 28 U.S.C. § 1920; Fed.R.Civ.P. 54; Local Civ. R. 54.1. There is no provision for a prevailing party to be awarded the cost of its investigator. See Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437, 441-42 (1987) ("costs" include only the specific items enumerated in 28 U.S.C. § 1920). See also Whitfield v. Scully, 241 F.3d 264, 270-71 (2d Cir. 2001) (deference should be accorded to a district court's interpretation of its own local rule). Accordingly, the request to tax costs for the investigator's fee must be denied.

  In its papers, Kingvision has also requested service of process fees of $90 and filing fees of $75. (See Lonstein Aff. ¶ 21). Kingvision is plainly entitled to recover these costs and they should be allowed. See Local Civ R. 54.1(c)(10).

  V. Conclusion

  For the reasons set forth above, Kingvision should be awarded judgment against defendant Los Amigos in the amount of $12,165 consisting of $12,000 in statutory damages and $165 in costs.

  VI. Notice of Procedure for Filing of Objections to this Report and Recommendation

  The parties are hereby directed that if they have any objections to this Report and Recommendation, they must, within ten days from today, make them in writing, file them with the Clerk of the Court, and send copies to the chambers of the Honorable George B. Daniels, United States District Judge, and to the chambers of the undersigned, at the United States Courthouse, 500 Pearl Street, New York, New York 10007, and to any opposing parties. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), 6(e), 72(b). Any requests for an extension of time for filing objections must be directed to Judge Daniels. Any failure to file timely objections will result in a waiver of those objections for purposes of appeal. See Thomas v. Arn, 474 U.S. 140, 106 S.Ct. 466, 88 L.Ed.2d 435 (1985); Frank v. Johnson, 968 F.2d 298, 300 (2d Cir. 1992); 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), 6(e), 72(b).

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