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

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, ...


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