United States District Court, S.D. New York
July 9, 2004.
BARBARA MEINECKE, MICHAEL WARNER, JUAN DELACRUZ, CARLOS DIAZ, THOMAS IURILLI, JODY KLEIN, GENE LEFEBVRE, DAVID DOING, MARCOS JAVIER, TONY CRUZ, Defendants.
The opinion of the court was delivered by: GABRIEL GORENSTEIN, Magistrate Judge
REPORT AND RECOMMENDATION
On May 23, 2003, plaintiff DirecTV, Inc. ("DTV") filed a
complaint against a number of defendants, including Marcos Javier
and Michael Warner. See Complaint, filed May 23, 2003 (Docket
#1), ¶¶ 8, 15. The complaint seeks damages and injunctive relief
for the unauthorized interception of DTV's satellite
transmissions in violation of 47 U.S.C. § 605(a) and
18 U.S.C. § 2511(1)(a), and the possession and use of a "Pirate Access
Device" in violation of 18 U.S.C. § 2512(1)(b). See Complaint
¶¶ 20-31. The defendants were served, see Affidavit of Service
of Marcos Javier, filed July 30, 2003 (Docket #4); Affidavit of
Service of Michael Warner, filed July 30, 2003 (Docket #5), but
did not answer, see Clerk's Certificate for Defendant Marcos
Javier and Michael Warner, dated February 11, 2004. DTV
thereafter submitted an application for default judgment under
18 U.S.C. § 2511(1)(a), seeking $10,000 in damages and $850 in
attorneys' fees and costs against each defendant. See Affidavit
for Judgment by Default for Defendants Marcos Javier and Michael
Warner, filed February 17, 2004 (Docket #21) ("Pl.'s Aff."), at 2. On March 9, 2004, United States District Judge John
G. Koeltl entered an Order of default and referred the case to
the undersigned for an inquest regarding damages. See Order,
filed March 9, 2004 (Docket #25).
By Order dated March 19, 2004, this Court directed DTV to
submit a memorandum of law concerning damages and any other
monetary relief permitted against the defendants. See
Scheduling Order for Damages Inquest, dated March 19, 2004
("Scheduling Order"), at 2. A copy of the order was mailed to the
defendants. In response, DTV submitted a memorandum of law
seeking to recover statutory damages in the amount of $10,000
against each defendant and attorneys' fees and costs in the
amount of $4815.80, which the plaintiff proposed splitting
between the two defendants. See Plaintiff's Memorandum
Concerning Damages on Default for Defendants Javier and Warner,
dated May 3, 2004 (Docket #29) ("Pl.'s Mem."), at 5. The Court
gave defendants until June 2, 2004 to submit any response, see
Scheduling Order at 2, but neither defendant availed himself of
DTV did not request a hearing on the issue of damages. The
Second Circuit has held that an inquest into damages may be held
on the basis of documentary evidence "as long as [the Court has]
ensured that there was a basis for the damages specified in [the]
default judgment." Fustok v. ContiCommodity Servs., Inc.,
873 F.2d 38, 40 (2d Cir. 1989); accord Action S.A. v. Marc Rich &
Co. Inc., 951 F.2d 504 (2d Cir. 1991), cert. denied,
503 U.S. 1006 (1992). As DTV's submissions provide such a basis, no
hearing is required. The following findings of fact and
conclusions of law are based on those submissions. In addition,
in light of the defendants' default, DTV's properly-pleaded
allegations, except those relating to damages, are accepted as
true. See, e.g., Cotton v. Slone, 4 F.3d 176, 181 (2d Cir.
1993) ("factual allegations are taken as true in light of the general default judgment"); Greyhound
Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158
(2d Cir. 1992), cert. denied, 506 U.S. 1080 (1993); Time
Warner Cable of N.Y.C. v. Barnes, 13 F. Supp.2d 543, 547
II. FINDINGS OF FACT AND CONCLUSIONS OF LAW
DTV, a California corporation, operates a nationwide direct
broadcast satellite television system. Complaint ¶ 1. Defendant
Javier is a resident of Bronx, New York. Id. ¶ 15. Defendant
Warner is a resident of Glen Sprey, New York. Id. ¶ 8.
DTV electronically scrambles its satellite transmissions to
prevent unauthorized viewing of its satellite television
programming. Id. ¶ 2. In order to view the transmissions each
customer is required to maintain an account with DTV and obtain
the proper hardware, including a small satellite dish and an item
called an "access card." Id.
On or about May 25, 2001, DTV executed several writs of seizure
upon mail shipping facilities used by major sources of pirate
technologies. Id. ¶ 3. From these raids, DTV came into
possession of records showing that Javier and Warner illegally
purchased modified access cards, commonly referred to as "pirate
access devices." Id.
DTV alleges that the defendants purchased the pirate access
devises in or about March 2001, using interstate or foreign wire
facilities, and received the orders via the Postal Service or
commercial mail carriers. Id. ¶¶ 8(a), 15(a). DTV further
alleges that each defendant used the pirate access device to
decrypt and view DTV satellite signals. Id. ¶¶ 21, 25.
A. STATUTORY DAMAGES
DTV has not been consistent in explaining under what statute it
seeks damages against Javier and Warner. DTV's complaint alleged
the violation of three statutes 47 U.S.C. § 605(a), 18 U.S.C. § 2512(1)(b) and 18 U.S.C. § 2511(1)(a) although in
its third prayer for relief, DTV requested, in the event of a
default, damages only for violations of § 2511(a)(2). See
Complaint at 10.*fn1 Consistent with the complaint, DTV's
application for default seeks damages only under § 2511. See
Pl.'s Aff. ¶ 7. DTV's memorandum of law, however, argues that it
is entitled to relief for violations of all three statutes. See
Pl.'s Mem. at 1-4. Notwithstanding this new argument, the Court
will hold DTV to the request made in the complaint and in its
application for a default judgment.*fn2
The measure of damages for violations of § 2511(1)(a) is set
out in § 2520(c)(2):
[U]nder this section, the court may assess as damages
whichever is the greater of
(A) the sum of the actual damages suffered by the
plaintiff and any profits made by the violator as a
result of the violation; or
(B) statutory damages of whichever is the greater of
$100 a day for each day of violation or $10,000.
18 U.S.C. § 2520(c)(2). Most courts have held that the decision
whether to award of damages under § 2520(c)(2) is discretionary.
See, e.g., DirecTV v. Brown, ___ F.3d ___, 2004 WL 1178469,
at *1 (11th Cir. May 28, 2004); Dorris v. Absher, 179 F.3d 420,
429 (6th Cir. 1999); Reynolds v. Spears, 93 F.3d 428, 435 (8th
Cir. 1996); Nalley v. Nalley, 53 F.3d 649
, 652 (4th Cir. 1995);
DirecTV v. Perrier, 2004 WL 941641, at *4 (W.D.N.Y. Mar. 15,
2004); but see Rodgers v. Wood, 910 F.2d 444
, 448 (7th Cir. 1990) (award of
damages is mandatory). The Court need not address this issue,
however, inasmuch as even if the award were discretionary, the
Court would award damages in this case as described further
Courts holding a damages award to be discretionary under §
2520(c)(2) typically adhere to the following analysis:
(1) The court should first determine the amount of
actual damages to the plaintiff plus the profits
derived by the violator, if any.
(2) The court should next ascertain the number of
days that the statute was violated, and multiply by
(3) The court should then tentatively award the
plaintiff the greater of the above two amounts,
unless each is less than $10,000, in which case
$10,000 is to be the presumed award.
(4) Finally, the court should exercise its discretion
to determine whether the plaintiff should receive any
damages at all in the case before it.
Dorris, 179 F.3d at 430 (citations omitted).
With respect to step 1, no information has been provided as to
DTV's actual damages or the profits earned by Javier and Warner.
With respect to step 2, no information is available to the Court
or to DTV itself on the duration of the defendants'
violation. In its memorandum, DTV asserts that Javier and Warner
probably had access to free satellite television for nearly
twenty months, from March 2001 until October 2002. See Pl.'s
Mem. at 3. If true, the damages would be at least $600,000 under
the $100-per-day formula. However, in the absence of information
regarding how many days the defendants were actually intercepting
communications in violation of § 2511, any such calculation is
speculative. Therefore, the Court will treat $10,000 in damages
as the presumed award. See DirecTV v. Kaas, 294 F. Supp.2d 1044,
1048 (N.D. Iowa 2004) ("the presumptive award of damages is
$10,000" when there is no evidence of actual damages or duration
of the violation). In similar cases brought by DTV, the courts have used several
factors when contemplating the fourth inquiry whether the Court
should exercise its discretion to award damages. See DirecTV
v. Huynh, ___ F. Supp.2d ___, 2004 WL 1123830, *7 (M.D. Ala.
May 19, 2004). These include:
(1) Whether the defendant profited by his violation;
(2) whether there was any evidence that the defendant
actually used his pirate access devices; (3) the
extent of [DTV's] financial harm; (4) the extent of
the defendant's violation; (5) whether the defendant
had a legitimate reason for his actions; (6) whether
an award of damages would serve a legitimate purpose;
and (7) whether the defendant was also subject to
another judgment based on the same conduct.
Id. (citations omitted).
The defendants' default, however along with their failure to
respond to the instant application for a judgment based on that
default has shrouded many of these factors in mystery. That
default alone should counsel against the assumption that any of
the factors favor the defendants. Moreover, it can hardly be
contested that pirate access devices rarely serve a legitimate
purpose beyond stealing satellite signals, see DirecTV v.
Getchel, 2004 WL 1202717, at *1 (D. Conn. May 26, 2004), and the
record in this case is of course devoid of any explanation as to
why Javier or Warner bought the device. Cf. DirecTV v.
Griffin, 290 F. Supp.2d 1340, 1348 (M.D. Fla. 2003) (defendant
who bought devices to use in his business testing home security
systems had a legitimate reason for buying devices). Finally, the
damages will serve the legitimate purpose of providing
compensation to DTV for the defendants' violations and deterring
future satellite television pirates. Accordingly, the Court
should exercise its discretion to award damages. B. ATTORNEYS' FEES
Under § 2520(b)(3) DTV is also entitled to a "reasonable
attorney's fee and other litigation costs reasonably incurred."
18 U.S.C. § 2520(b)(3). In New York State Ass'n for Retarded
Children, Inc. v. Carey, 711 F.2d 1136 (2d Cir. 1983), the
Second Circuit held that a party seeking an award of attorney's
fees must support the request with contemporaneous time records
that show "for each attorney, the date, the hours expended, and
the nature of the work done." Id. at 1148.
DTV has submitted a Declaration in Support of Attorneys' Fees
by its attorneys Mario Aieta and Daniel Jacobson, annexing
contemporaneous time records and indicating that DTV has incurred
attorneys' fees of $4815.80 and costs of $100 in litigating this
action. See Exhibit A to Declaration in Support of Attorneys'
Fees, dated May 3, 2004 ("Pl.'s Ex."), at 2. This amount,
however, differs markedly from the $850 award against each
defendant that DTV requested in its application for default
judgment. See Pl.'s Aff. at 2. DTV makes no attempt to explain
the discrepancy. It would be unfair at this point to award DTV
attorneys' fees incurred as of the date of its application in an
amount greater than the award it actually sought in that
Therefore, the Court will award the original $850 requested as
to each defendant for a total of $1700 support for which has
been provided in contemporaneous time records as well as the
fees incurred after the February 17, 2004 submission of the
application for default judgment. This amount is $658.50. See
Pl.'s Ex. at 2. The additional incremental amount will be divided
between the two defendants ($329.25 each).
As a result, this Court recommends that DTV be awarded
attorneys' fees and costs in the amount of $1179.25 against each
defendant. Summary of Award
In sum, the total judgment against each defendant should be:
Statutory Damages under § 2520(c)(2): $10,000.00
Attorneys' Fees and Costs: 1,179.25
For the foregoing reasons, this DTV should be awarded judgment
against each defendant in the amount of $11,179.25.
PROCEDURE FOR 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 this Report and Recommendation to file any objections.
See also Fed.R.Civ.P. 6(a), (e). Such objections (and any
responses to objections) shall be filed with the Clerk of the
Court, with copies sent to the Hon. John G. Koeltl, 500 Pearl
Street, New York, New York 10007. Any request for an extension of
time to file objections must be directed to Judge Koeltl. If a
party fails to file timely objections, that party will not be
permitted to raise any objections to this Report and
Recommendation on appeal. See Thomas v. Arn, 474 U.S. 140