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TIME WARNER ENTMT./ADV. NEWHOUSE P'SHIP v. STOCKTON

United States District Court, N.D. New York


August 3, 2004.

TIME WARNER ENTERTAINMENT/ADVANCE NEWHOUSE PARTERNSHIP, Plaintiff,
v.
PETER STOCKTON, Defendant.

The opinion of the court was delivered by: FREDERICK SCULLIN, Chief Judge, District

MEMORANDUM-DECISION AND ORDER

I. INTRODUCTION

  Plaintiff, a cable television franchisee, alleges that Defendant unlawfully intercepted its subscription-only cable signals by purchasing and using an electronic decoder box ("decoder") in violation of the Communications Act, 47 U.S.C. § 553(a) and 605(a). Plaintiff alleges further that Defendant purchased six decoders and therefore also intended to re-sell the decoders on the black market, a violation of 47 U.S.C. § 553(a)(2) and 605(e)(4).

  II. BACKGROUND

  Plaintiff's claims against Defendant arose after Plaintiff's affiliate, Time Warner Cable of New York City ("TWCNYC"), investigated a business called M.D. Electronics ("M.D."). Over the course of the investigation, TWCNYC confirmed that M.D. was engaged in the sale and distribution of "pirate" cable television converter-decoders ("decoders"), i.e., devices that enable users to view premium and pay-per-view cable programming without authorization or payment. TWCNYC eventually obtained records of M.D.'s sales of decoders, including sales in Plaintiff's franchise area. Plaintiff subsequently identified M.D.'s customers who purchased decoders and were also Plaintiff's subscribers, including Defendant. On December 28, 2000, Plaintiff commenced this action alleging that Defendant (1) used the purchased decoders to intercept Plaintiff's premium and pay-per-view programming services without its authorization and without payment to it and (2) engaged in the sale and distribution of the decoders.

  Defendant failed to answer, and the Clerk entered default on April 17, 2001. See Dkt. No. 4. The Court then moved for dismissal for want of prosecution on January 9, 2003. See Dkt. No. 5. Plaintiff responded by moving for default judgment on March 24, 2003. See Dkt. No. 7. Defendant responded to the motion via handwritten letter and indicated that he would like to commence settlement negotiations; Plaintiff agreed. After receiving no further correspondence from the parties, the Court once again moved for dismissal for want of prosecution on September 10, 2003. See Dkt. No. 12. Plaintiff responded, requesting that the Court permit it to conduct discovery or re-file its default judgment motion. See Dkt. No. 13. The Court gave Defendant another opportunity to answer and advised the parties that, if Defendant did not answer, Plaintiff could re-file its motion for default judgment. Defendant did not respond, and Plaintiff then moved for an inquest regarding damages and re-filed its motion for default judgment. See Dkt. No. 14. Defendant responded to the motion by letter on November 3, 2003. See Dkt. No. 15.

  III. DISCUSSION

  A. Default Judgment

  The Federal Rules of Civil Procedure prescribe a two-step process to enter judgment by default. See Thomas v. Sclavo, S.P.A., No. 94CV1568, 1998 WL 51861, *2-*3 (N.D.N.Y. Feb. 4, 1998). Under Rule 55(a), a clerk must first enter the default against a party who fails to plead or otherwise defend. See Fed.R.Civ.P. 55(a). The party seeking entry of default must provide evidence that the entry of default is appropriate. See id. The second step in the process requires that a plaintiff move the court for default judgment. See Thomas, 1998 WL 51861, at *3. In considering a motion for default judgment, the court will treat the well-pleaded factual allegations of the complaint as true, and the court will then analyze those facts for their sufficiency to state a claim. See id. at *3-*4 (citations omitted).

  With these standards in mind, the Court will address Plaintiff's claims.

  B. Plaintiff's Claims under the Communications Act of 1934, 47 U.S.C. § 553(a)(1) and 605(e)(4)

  Both §§ 553 and 605 of the Communications Act prohibit unauthorized reception of cable television programming and the sale of decoders. See, e.g., Cmty. Television Sys., Inc. v. Caruso, 284 F.3d 430, 435 (2d Cir. 2002) (citing International Cablevision, Inc. v. Sykes ("Sykes II"), 75 F.3d 123, 131 n. 5, 133 (2d Cir. 1996)). Specifically, §§ 553(a)(1) and 605(a) prohibit individuals from receiving unauthorized cable programming and §§ 553(a)(2) and 605(e)(4) prohibit the sale of decoders. See 47 U.S.C. § 553(a)(1) and 605(a); see also 47 U.S.C. § 553(a)(2) and 605(e)(4).

  The Second Circuit has held that liability attaches under these sections regardless of whether the individual who sells the decoder profits from the sales. See Int'l Cablevision, Inc. v. Sykes, 998 F.2d 997, 1004 (2d Cir. 1993). Moreover, the statute's prohibition on the sale of decoders extends both to those who engage in the continuing business of selling decoders and those who sell a single decoder. See id. Although § 553 has a good-faith partial defense provision that allows a court to reduce the award of damages if the violator was not aware and had no reason to believe that he violated the statute, "there is no suggestion in § 553(a)(1) that an unaware person even as thus described in § 553(c)(3)(C) is exempted from liability. . . ." Id. Thus, courts in this Circuit have consistently been very reluctant to accept ignorance as a defense to liability under these provisions. See, e.g., Kingvision v. Hansen, No. 02 Civ. 6587, 2004 WL 744230, *3 (S.D.N.Y. Apr. 5, 2004); Cablevision Sys. New York City Corp. v. Cicero, No. 99 Civ. 3190, 2000 U.S. Dist. LEXIS 21903, *17-*19 (S.D.N.Y. Aug. 28, 2000).

  Plaintiff contends that Defendant (1) purchased six illegal decoders, (2) used at least one of the decoders to view Plaintiff's cable programming without authorization and payment, and (3) sold decoders with knowledge that buyers would use them to gain unauthorized access to cable service. In sum, Plaintiff has produced evidence that Defendant ordered and received six decoders from M.D. Electronics and, from this, asks the Court to infer that Defendant retained one for his personal use and sold the other five.

  In his second letter to the Court, Defendant contends that he believed that the decoders were legal when he purchased them, and he turned the decoders over to Plaintiff during an amnesty period. In addition, he contends that he purchased several decoders because some of the decoders that he purchased did not work.

  Defendant conceded in his letter to the Court that he purchased and intended to use the decoders. He also acknowledged that he used the decoders to view restricted programs on several occasions. Although Defendant's argument that he did not know that the decoders were unlawful may bear on the amount of damages the Court imposes, his argument does not bear on the issue of liability. See Cicero, 2000 U.S. Dist. LEXIS 21903, at *17-*19. Although Defendant has also claimed that he is entitled to amnesty because he turned his decoders over to Plaintiff, he did not provide any evidence or even specific details regarding that transaction. Accordingly, the Court grants Plaintiff a default judgment on liability with respect to its claims under §§ 553(a)(1) and 605(a), which prohibit individuals from receiving unauthorized cable programming.

  The remaining liability issue is whether Plaintiff is also entitled to a default judgment with respect to its claims under §§ 553(a)(2) and 605(e)(4), which prohibit the sale of decoders. Courts in this Circuit are generally willing to grant a plaintiff a presumption on this issue where the defendant purchased more decoders than he ordinarily would use in his home. See, e.g., Time Warner Cable of New York City v. Papathanasis, No. 97 Civ. 3537, 1998 U.S. Dist. LEXIS 22672, *11 (S.D.N.Y. Sept. 23, 1998) ("Plaintiff has plausibly argued that the only reasonable conclusion to be drawn from the possession of so many such devices is that twenty-nine of the thirty devices purchased by defendant were sold or distributed to third partes, and were not simply being used in a single residence."); see also Cablevision Sys. Corp. v. De Palma, No. CV-87-3528, 1989 WL 8165, *4 (E.D.N.Y. Jan. 17, 1989) ("[w]hile [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."). This case is distinguishable on the ground that, in contrast to the defendants in Papathanasis and DePalma, who had purchased dozens of decoders, Defendant only purchased six. However, Defendant did not rebut Plaintiff's contention that he re-sold the decoders, and he did not contend that he kept all six for his personal use. Accordingly, the Court grants Plaintiff a default judgment with respect to liability on its §§ 553(a)(2) and 605(e)(4) claims, as well.

  C. Statutory Damages and Attorneys' Fees

  The Communications Act authorizes statutory damages for violations of its various provisions. See generally 47 U.S.C. § 553(c)(3)(A)(ii), 605(e)(3)(C)(i)(II). Where a defendant's conduct violates both §§ 553 and 605, the damages provisions of § 605 apply. See Caruso, 284 F.3d at 435 (citations omitted); TWC Cable Partners v. Multipurpose Elecs. Int'l, Inc., No. CV-97-2568, 1997 WL 833471, *1 (E.D.N.Y. Oct. 6, 1997) (citation omitted). Under § 605(e)(3)(C)(i)(II), violations of § 605(a) carry statutory damages of not less than $1,000 or more than $10,000 per violation, and violations of § 605(e)(4) carry statutory damages of not less than $10,000 or more than $100,000 per violation. "The specific amount of statutory damages assessed pursuant to section 605 rests within the sound discretion of the court." Cablevision of S. Conn., Ltd. P'ship v. Smith, 141 F. Supp.2d 277, 286 (D. Conn. 2001) (citation omitted); Papathanasis, 1998 U.S. Dist. LEXIS 22672, at *12 (citations omitted).

  Plaintiff has requested statutory damages. As stated above, Plaintiff hypothesizes that Defendant retained one of the six decoders for personal use and sold the remaining five. This amounts to one violation of § 605(a), for which Plaintiff requests an award of $10,000 (the statutory maximum) and five violations of § 605(e)(4), for which Plaintiff requests an award of a minimum of $10,000 per violation, or $50,000. Cf. Time Warner Cable of New York City v. Browne, No. 00 CIV. 0412, 2000 WL 567015, *1 (May 10, 2000) (awarding $41,000 total in statutory damages on default judgment for presumed sale of four converter-decoders and retention of one for personal use).

  Plaintiff additionally seeks to recoup costs and attorneys' fees pursuant to 47 U.S.C. § 605(e)(3)(B)(iii), which provides that a court "shall direct the recovery of full costs, including the award of reasonable attorney's fees to an aggrieved party who prevails." In support of its request, Plaintiff has provided contemporaneous time records of work performed prosecuting the instant action, as the Second Circuit requires. See TWC Cable Partners, 1997 WL 833471, at *2 (citing New York State Ass'n for Retarded Children, Inc. v. Carey, 711 F.2d 1136, 1147-48 (2d Cir. 1983)). Based on these records, Plaintiff seeks to recoup $1,681.50 in attorneys' fees, $150.00 in filing fees, and $30.92 in shipping fees.

  Defendant did not address the issue of damages, costs, or attorneys' fees in his letters to the Court. Therefore, before awarding Plaintiff its requested damages, costs and/or attorneys' fees, the Court will provide Defendant with the opportunity to submit evidence with regard to this issue. IV. CONCLUSION

  After carefully considering the file in this matter and the parties' submissions, as well as the applicable law, and for the reasons stated herein, the Court hereby

  ORDERS that Plaintiff's motion for a default judgment against Defendant Peter Stockton is GRANTED with respect to the issue of liability; and the Court further

  ORDERS that Defendant file and serve any opposition to Plaintiff's request for damages, attorneys' fees and costs within thirty days of the date of this Order.

 

IT IS SO ORDERED.
20040803

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