United States District Court, S.D. New York
June 3, 2005.
CABLEVISION SYSTEMS NEW YORK CITY CORPORATION, Plaintiff,
GERTHA GUIGNARD, Defendant.
The opinion of the court was delivered by: KEVIN FOX, Magistrate Judge
REPORT AND RECOMMENDATION
TO THE HONORABLE RICHARD J. HOLWELL, UNITED STATES DISTRICT JUDGE.
In this action, Cablevision Systems New York City Corporation
("Cablevision") alleges that Gertha Guignard ("Guignard")
intercepted cable television programming signals illegally, in
violation of the Cable Communications Policy Act, as amended,
47 U.S.C. §§ 553(a)(1) and 605(a).
Upon Guignard's failure to file an answer or otherwise respond
to the Complaint, United States District Judge Shira A. Sheindlin
ordered that a default judgment be filed against her. Thereafter,
Judge Sheindlin referred the matter to the undersigned to conduct
an inquest and to report and recommend the amount of damages, if
any, to be awarded against Guignard.
The Court directed Cablevision to serve and file proposed
findings of fact and conclusions of law, and an inquest
memorandum setting forth its proof of damages, costs of this
action, and its attorneys' fees. The Court also directed Guignard
to serve and file any opposing memoranda, affidavits and exhibits, as well as any alternative
findings of fact and conclusions of law she deemed appropriate.
Guignard did not file any papers in opposition to Cablevision's
submissions. In November 2003, this case was reassigned to your
Cablevision's submissions aver that it is entitled to $10,000
in statutory damages and $1,284 in attorneys' fees. For the
reasons that follow, I recommend that Cablevision be awarded
$11,284: statutory damages of $10,000, pursuant to
47 U.S.C. § 605, and attorneys' fees of $1,284.
II. BACKGROUND AND FACTS
When a defendant defaults in an action, by failing to plead or
otherwise defend against a complaint, the defendant is deemed to
have admitted every well-pleaded allegation of the complaint
except those relating to damages. 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). In
addition, the plaintiff is entitled to all reasonable inferences
from the evidence presented. See Au Bon Pain Corp. v. Artect,
Inc., et al., 653 F.2d 61, 65 (2d Cir. 1981). Based upon the
submissions made by the plaintiff, the complaint filed in the
instant action, and the Court's review of the entire court file
in this action, the following findings of fact are made:
Cablevision is a Delaware corporation which is authorized to do
business in New York and has its principal offices in Bethpage,
New York and Bronx, New York. See Complaint, ¶ 4, at 2.
Guignard is an individual residing at 2075 St. Raymonds Avenue,
Apt. 2C, Bronx, New York. See Plaintiff's Memorandum of Law in
Support of Inquest ("Pl.'s Mem."), at 2. Pursuant to a franchise
awarded by the State of New York, Cablevision constructs,
operates and maintains cable television systems in Bronx County,
where Guignard resides. See id. Cablevision provides cable television services to subscribers
who request and pay for them. See Affidavit of Donald Kempton
in Support of Damages ("Kempton Aff."), ¶ 2, at 1. Cablevision
offers different tiers of programming services to its
subscribers. "Basic" service is offered at a monthly rate, and
provides a residential subscriber with enhanced quality reception
of broadcast stations, as well as a small number of additional
programming services. See id., ¶ 3, at 1. "Family" service is
a higher level of service, which provides a subscriber with all
of Cablevision's programming services except for its "premium"
and pay-per-view programming services. See id., ¶ 3, at 1-2.
Cablevision's residential subscribers may also subscribe to one
or more premium services such as Cinemax, Home Box Office, and
Showtime, for an additional monthly charge per service. Premium
services range in price from approximately $1.95 to $14.95 per
month per service. See id., ¶ 4, at 2. The full range of
Cablevision's premium programming channels, not including
pay-per-view events, is offered to residential subscribers at an
average cost of approximately $80.95 per month. See id.
Subscribers may also order pay-per-view programming services.
Pay-per-view programming includes movies and sporting events,
fees for which are charged on a per-event basis. See id., ¶
5, at 2. The pay-per-view service includes selections which
typically range in price from approximately $4.00 to $49.95 per
selection, and are offered continuously over a 24-hour period.
The aggregate value of the pay-per-view events offered over a
typical month, assuming each pay-per-view event is viewed only
once, is approximately four hundred dollars. See id. Cablevision provides its cable television service to
subscribers via subscription agreements. Cablevision agrees to
provide the services requested by a subscriber in exchange for
the subscriber's agreement to pay for those services on a monthly
basis. See id., ¶ 6, at 2. Each Cablevision subscriber is
entitled to receive only the level and amount of cable
programming and services for which that subscriber has paid.
See id., ¶ 7, at 2-3.
As part of its cable service, Cablevision provides each
subscriber with equipment known as a converter-decoder.
Cablevision programs the converter-decoder so that each
subscriber can receive and view only the level and amount of
cable programming he or she has selected and purchased. The
rental fee for the converter-decoder is regulated by the Federal
Communications Commission on an actual cost basis. The fee is
included in the subscriber's monthly bill. See id., ¶ 8, at
Cablevision receives the signals for most of its cable
television programming services from orbiting satellites and
local radio towers. See id., ¶ 9, at 3. In order to protect
its cable programming from theft and unauthorized reception
commonly known as cable "piracy" Cablevision encrypts or
"scrambles" the signals to all programming which a subscriber has
not purchased and is not authorized to receive. See id., ¶¶
9, 13, at 3-4. When Cablevision's programming is in a scrambled
mode, it is distorted and unviewable by a subscriber who has not
paid for such programming. See id., ¶ 9, at 3. Scrambling is
one of the principal security measures used by Cablevision and
other cable television operators to prevent cable piracy. See
id., ¶ 13, at 4.
Either by technical modification or computer command,
Cablevision programs the converter-decoders provided to its
subscribers to descramble reception of only those programming channels which a subscriber has purchased. See
id., ¶ 10, at 3. The converter-decoders which Cablevision
provides to its subscribers have a technology feature and
function known as "addressability." Addressability is a
communication link between a cable operator's central computer
and the descrambling computer circuitry in each
converter-decoder. See id., ¶ 11, at 4.
There is a "black market" industry of various manufacturers,
vendors and distributors of "pirate" converter-decoders. These
"pirate" converter-decoders are sold to individuals who use the
devices to avoid paying a cable operator's subscription fees for
the authorized reception of premium and pay-per-view cable
television programming. A cable operator's authorized
converter-decoder can also be modified into a "pirate"
converter-decoder by inserting unauthorized integrated circuits,
commonly known as "chips," into that device, or by electronically
reprogramming the device. "Pirate" converter-decoders allow their
users to descramble all scrambled premium and pay-per-view cable
television programming, regardless of whether such services have
been paid for or whether the user is authorized to receive such
programming. With a "pirate" converter-decoder, the
addressability technology is disabled so that the cable operator
is unable to communicate with the "pirate" converter-decoder or
even recognize that it has been attached to its cable system.
See id., ¶¶ 14-15, at 4-5.
Guignard became a Cablevision subscriber on December 20, 1991.
See id., ¶ 20, at 6. At that time, she subscribed to
Cablevision's Rainbow Gold level of service, the highest level of
service available. On June 14, 1996, Guignard decreased her level
of service to the Family level. See id.
Soon thereafter, on or about June 27, 1996, Guignard purchased
one "pirate" converter-decoder from Bears & Bows, Inc. d/b/a Millennium Enterprises
("Millennium"),*fn1 permitting the viewing of Cablevision's
premium and pay-per-view programming services without
authorization or payment. See id., ¶ 21, at 6. There is no
legitimate function or purpose for converter-decoders which have
been designed to descramble all scrambled programming, including
pay-per-view events. The sole purpose of such devices is to
enable their users to receive unauthorized cable television
programming without having to pay for that programming. See
id., ¶ 24, at 7.
III. CONCLUSIONS OF LAW
47 U.S.C. §§ 553*fn2 and 605*fn3 both prohibit the
unauthorized interception and reception of cable programming
services which originate and are delivered via satellite or by
other means of over-the-air signal transmission. See Time
Warner Cable of New York City v. Barnes, 13 F. Supp. 2d 543,
547-48 (S.D.N.Y. 1998) (citing International Cablevision, Inc.
v. Sykes & Noel, 75 F.3d 123, 133 [2d Cir. 1996]); Cablevision Systems New York
City Corp. v. Lokshin, 980 F. Supp. 107, 112 (E.D.N.Y.
Cablevision's premium and pay-per-view programming signals are
sent to Cablevision from orbiting satellites and radio towers.
See Kempton Aff., ¶ 9, at 3. Accordingly, Cablevision's cable
programming services are protected from unauthorized reception
under 47 U.S.C. § 605(a). See Barnes, 13 F. Supp. 2d at 548
Guignard purchased a "pirate" converter-decoder from
Millennium. See Kempton Aff., ¶ 21, at 6. This device permits
its users to view Cablevision's premium and pay-per-view
television programming without authorization. See id., ¶ 22,
at 6-7. Since the defendant was previously provided with an
authorized converter-decoder from Cablevision, it is reasonable
to conclude that her purpose in purchasing "pirate" equipment
from Millennium was to receive unauthorized cable television
programming. In any event, the defendant's default has left the
Court without any factual basis upon which to reach an
alternative conclusion respecting her use of the
converter-decoder she purchased from Millennium. In light of the
above, the Court finds that the defendant violated
47 U.S.C. §§ 553(a)(1) and 605 (a).
Cablevision possesses "proprietary rights" in the
communications which Guignard intercepted, and is thus a "person
aggrieved" within the meaning of 47 U.S.C. §§ 553(c)(1) and
605(e)(3)(A). When a court determines that a defendant's conduct has violated
both 47 U.S.C. §§ 553 and 605, a plaintiff may recover damages
under only one of those sections. Barnes,
13 F. Supp. 2d at 548; American Cablevision of Queens v. McGinn,
817 F. Supp. 317, 320 (E.D.N.Y. 1993). For violations of both sections 553 and
605, an aggrieved cable operator may elect to recover damages
under section 605 in consideration of section 605's higher
damages award. Barnes, 13 F. Supp. 2d at 548 (citations
Cablevision has elected to recover statutory damages against
Guignard, rather than actual damages. Section 605(e)(3)
authorizes the Court to award statutory damages of "not less than
$1,000 or more than $10,000, as the court considers just."
47 U.S.C. § 605(e)(3)(C)(i)(II).
Cablevision avers that the defendant's default has prevented
Cablevision from discovering evidence establishing how long she
received unauthorized programming services. See Pl.'s Mem., at
8. Cablevision, therefore, seeks an award of statutory damages in
the amount of $10,000.
Guignard became a Cablevision subscriber on December 20, 1991;
on that date, she subscribed to the "Rainbow Gold" level of
service. On June 14, 1996, she downgraded the level of her
programming service to the "Family" level of service. She
purchased a "pirate" converter-decoder from Millennium on or
about June 27, 1996. On July 30, 2001, Guignard added Starz and
Encore, two premium networks, to her "Family" level programming
package. See Kempton Aff., ¶ 20, at 6. The addition of these
premium networks, for a monthly fee, suggests that Guignard had
ceased use of the "pirate" converter-decoder, as the "pirate"
device allows the user to receive all premium and pay-per-view
programming free of charge. Therefore, the Court finds that
Guignard's unauthorized usage encompassed approximately 61 months
(from the date of the purchase of the converter-decoder device in 1996, until the date
on which Guignard added the Starz and Encore networks in 2001).
The record reflects that the full range of Cablevision's
premium programming channels, not including pay-per-view events,
is offered to residential subscribers at an average cost of
$80.95 per month. See id., ¶ 4, at 2. Guignard subscribed to
the "Family" level of service for approximately 61 months, from
June 14, 1996, to July 30, 2001. Since the monthly subscriber fee
for the "Family" level of service was approximately $40 per
month, it is reasonable to conclude that, during this period,
Guignard was receiving unauthorized free access to programming
valued at $40.95 per month. See id. Accordingly, $2,497.95 in
unpaid programming fees was lost by Cablevision.
The aggregate value of all pay-per-view events offered over a
typical month, assuming each pay-per-view event is viewed only
once, is approximately four hundred dollars per month. See
id., ¶ 5, at 2. However, to conclude that Guignard watched each
and every pay-per-view selection offered, on each day during the
61-month period, is unreasonable.
Cablevision's pay-per-view events range in cost from
approximately $4.00 to $49.95 per selection. Based on these
costs, the Court finds that an average value of $125 per month
for the defendant's unauthorized free access to Cablevision's
pay-per-view events is appropriate. See, e.g., Lokshin,
980 F. Supp. at 113 (finding award of $125 per month for unauthorized
pay-per-view services to be reasonable). Under these
circumstances, $7,625 is the reasonable value of the pay-per-view
selections Guignard might have viewed without making payment to
Cablevision. This sum takes into consideration Guignard's 61
months of unauthorized usage. In reaching this determination, the
Court also considers Guignard's failure to appear in this action, which illustrates her indifferent attitude toward the
communications law. See Cablevision Systems New York City
Corp. v. Faschitti, No. 94 Civ. 6830, 1996 WL 48689, at *2
(S.D.N.Y. Feb. 7, 1996) (citing Cable/Home Communication Corp.
v. Network Prods., Inc., 902 F.2d 829, 852 [11th Cir. 1990]
[recognizing goal of deterrence and noting that court may
consider party's attitude in determining statutory damages
Therefore, the total value of cable programming services
intercepted illegally by Guignard is approximately $10,122.95
($2,497.95 for unauthorized premium programming plus $7,625 for
unauthorized pay-per-view programming). Accordingly, the Court
finds that plaintiff is entitled to $10,000, pursuant to
47 U.S.C. § 605, for the defendant's use of a "pirate" decoding
device to intercept illegally plaintiff's cable television
47 U.S.C. § 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).
When fixing a reasonable rate for attorneys' fees, it is
appropriate for a court to consider and to apply the prevailing
market rates in the relevant community for similar legal work of
lawyers of reasonably comparable skill, experience, and
reputation. See Blum v. Stenson, 465 U.S. 886, 895 n. 11,
104 S. Ct. 1541 n. 11 (1984). In addition, it is permissible for a
court to rely upon its own knowledge of private firm hourly rates
in deciding what reasonable attorneys' fees are in the community.
Miele v. N.Y. State Teamsters Conf. Pens. & Ret. Fund,
831 F.2d 407, 409 (2d Cir. 1987).
In the Second Circuit, a party seeking an award of attorneys'
fees must support that request with contemporaneous time records
that show, "for each attorney, the date, the hours expended, and the nature of the work done." New York State Ass'n
for Retarded Children, Inc. v. Carey, 711 F.2d 1136, 1154 (2d
Cir. 1983). Attorney fee applications that do not contain such
supporting data "should normally be disallowed." Id. at 1154.
In prosecuting this action against Guignard, Cablevision
engaged the service of the law firm Lefkowitz, Louis & Sullivan,
L.L.P. Melinda M. Dus ("Dus"), an attorney with that firm,
submitted an affirmation to the Court setting forth: (a) the
names of the attorneys and paralegals who worked on this matter;
(b) the professional experience of those persons; (c) the number
of hours each person devoted to this action; and (d) the nature
of the work each person performed. In addition, Dus averred that
certain work done by attorneys and paralegals of the law firm was
performed at a set fee, pursuant to a fee schedule previously
agreed upon by plaintiff and its counsel.
Contemporaneous time records for the relevant law firm
personnel were submitted to the Court. The time records indicate
that plaintiff incurred attorneys' fees through the work
performed by the following law firm personnel:
Jennean R. Lee, Esq.: 0.8 hours @ $145 per hour
Draft Complaint @ $300
Melinda M. Dus, Esq.: Draft Inquest Papers @ $600
Susan A. Weindler, Paralegal: 0.4 hours @ $85 per hour
Alfonso N. Cava, Paralegal: 0.4 hours @ $85 per hour
Draft Default Papers @ $200
Based upon the nature of this case, the Court's review of the
submissions by Cablevision, which outline the services performed
by counsel, and the Court's understanding of the hourly rates
charged by private law firms in the community, the Court
concludes that $1,284 in attorneys' fees was reasonably incurred by Cablevision in
connection with prosecuting this action against Guignard.
For the reasons set forth above, the Court recommends an award
to Cablevision of $11,284 for damages and attorneys' fees
incurred in prosecuting this action against Guignard.
* * *
Plaintiff shall serve defendant Guignard with a copy of this
Report and Recommendation and submit proof of service to the
V. FILING OBJECTIONS TO THIS REPORT AND RECOMMENDATION
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 the Report to file written objections. See also
Fed.R.Civ.P. 6. Such objections, and any responses to
objections, shall be filed with the Clerk of Court, with courtesy
copies delivered to the chambers of the Honorable Richard J.
Holwell, United States District Judge, 500 Pearl Street, Room
1950, New York, New York 10007, and to the chambers of the
undersigned, 40 Centre Street, Room 540, New York, New York
10007. Any requests for an extension of time for filing
objections must be directed to Judge Holwell. FAILURE TO FILE
OBJECTIONS WITHIN TEN (10) DAYS WILL RESULT IN A WAIVER OF
OBJECTIONS AND WILL PRECLUDE APPELLATE REVIEW. See Thomas v.
Arn, 474 U.S. 140 (1985); IUE AFL-CIO Pension Fund v.
Herrmann, 9 F.3d 1049, 1054 (2d Cir. 1993); Frank v. Johnson,
968 F.2d 298, 300 (2d Cir. 1992); Wesolek v. Candair Ltd., 838 F.2d 55, 57-59 (2d Cir. 1998); McCarthy v. Manson, 714 F.2d 234,
237-38 (2d Cir. 1983).