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United States District Court, S.D. New York

July 9, 2004.

DIRECTV, Plaintiff,

The opinion of the court was delivered by: GABRIEL GORENSTEIN, Magistrate Judge



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 this opportunity.

  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 (S.D.N.Y. 1998).


  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.


  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 below.

  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 $100.
(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 application.

  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 ______________________________________________________ Total: $11,179.25
  For the foregoing reasons, this DTV should be awarded judgment against each defendant in the amount of $11,179.25.


  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 (1985).


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