Opinion
01 Civ. 4340 (GEL)(FM)
July 10, 2002
REPORT AND RECOMMENDATION TO THE HONORABLE GERARD E.LYNCH
This Report and Recommendation was prepared with the assistance of Efram Friedman, a student at Fordham Law School.
I. Introduction
In this action, plaintiff Cablevision Systems New York City Corporation ("Cablevision") alleges that defendant Vivian Diaz ("Diaz") illegally intercepted cable television programming signals, in violation of the Cable Communications Policy Act ("Communications Act"), as amended, 47 U.S.C. § 553 (a)(1) and 605(a).
Following Diaz's failure to answer or otherwise respond to the complaint, a default judgment was entered and the matter was referred to me to conduct an inquest regarding the damages, if any, to be awarded to Cablevision.
By order dated December 12, 2001, I directed Cablevision to serve and file an inquest memorandum by January 7, 2001, setting forth its proof of damages, as well as proposed findings of fact and conclusions of law. After two extensions requested by Cablevision, the Cablevision papers were timely filed on March 13, 2001. Diaz has failed to file any opposition papers or have any contact with this Court.
During the pendency of this inquest, the Court has sent Diaz three letters by certified mail advising her of the schedule for the submission of papers. All three letters have been returned as unclaimed.
For the reasons set forth below, I recommend that Cablevision be awarded judgment in the amount of $10,832.50, consisting of statutory damages in the amount of $10,000, attorneys' fees in the amount of $652.50, and $180 in costs. II. Background
As the Second Circuit has indicated, an inquest 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."Transatlantic Marine Claims Agency. Inc. v. Ace Shipping Corp., 109 F.3d 105, 111 (2d Cir. 1997) (quoting Fustok v. Conti Commodity Serv., Inc., 873 F.2d 38, 40 (2d Cir. 1989).
In light of Diaz's default, Cablevision's properly pleaded allegations must be accepted as true. 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); Time Warner Cable of N.Y.C. v. Barnes, 13 F. Supp.2d 543, 547 (S.D.N.Y. 1998); Cablevision Sys. N.Y.C. Corp. v. Lokshin, 980 F. Supp. 107, 111 (E.D.N.Y. 1997). My findings of fact and conclusions of law, based upon the unrefuted allegations of the complaint and Cablevision's inquest papers, are as follows:
Cablevision is a corporation organized and existing under the laws of the State of Delaware, with business offices at 1111 Stewart Avenue, Bethpage, New York, and 930 Soundview Avenue, Bronx, New York. (Compl. ¶ 4). At all relevant times, Diaz resided at 2144 Mapes Avenue, Bronx, New York. (Id. ¶ 5; Aff. of Charles Carroll, sworn to on Jan. 31, 2002 ("Carroll Aff."), ¶ 19 n. 1).
Pursuant to certain franchises, Cablevision constructs, operates, and maintains cable television systems in Kings and Bronx Counties. (Compl. ¶ 6). Cablevision offers several "packages" of programming services in those areas to subscribers who request and pay for them. (Id. ¶¶ 6-7). The "Basic" service package provides enhanced quality reception of broadcast stations as well as a limited number of additional programming services. (Carroll Aff. ¶ 3). The "Family" service package includes all of Cablevision's programming services, with the exception of its premium channels and pay-per-view programming services, at a monthly rate of approximately $40. (Id.).
Cablevision's residential subscribers also may elect to subscribe to one or more "premium" channels such as Cinemax, Home Box Office ("HBO"), or Showtime, for an additional monthly charge averaging $1.95 to $14.95 per service. (Id. ¶ 4). In addition, residential subscribers may order, on a pay-per-view basis, programming services such as movies and sporting events. (Id. ¶ 5). The pay-per-view service includes selections which typically range in price from approximately $4.95 to $49.95 per selection and are offered continuously over a 24-hour period. (Id.). The aggregate value of each pay-per-view event offered over a typical month, assuming each is viewed once, is hundreds of dollars. (Id.).
In addition to individual premium channels, Cablevision customers with Basic and Family service may subscribe to a premium service package, at a monthly rate ranging from $40.75 to $80.95, to receive all of the Cablevision programming services included in the Family service package, plus certain premium services, but not its pay-per-view programming services. (Id. ¶ 4).
Cablevision receives signals for nearly all of its services from satellites. (Compl. ¶ 10). Thereafter, the signals for all of Cablevision's cable and television services are transmitted to subscribers' homes through a network of cable wiring and equipment ("System"). (Id.).
Each Cablevision subscriber is entitled to receive only the level and amount of programming that the subscriber has selected and purchased. (Carroll Aff. ¶ 7). To prevent subscribers from receiving programming services for which they have not paid, Cablevision encodes or "scrambles" the signals for its services. (Compl. ¶ 11). Subscribers are provided with converter-decoder boxes programmed to authorize the viewing of the Cablevision services that have been purchased by those subscribers. (Id.). These converter-decoder boxes decode the scrambled Cablevision services for which the customer has subscribed. (Id.). Programming services not purchased remain scrambled and therefore are not viewable on a subscriber's television set. (Id.).
Despite this scrambling technology, it is possible for an individual to install an unauthorized converter-decoder which permits Cablevision signals to be illegally intercepted and descrambled free of charge. (Id. ¶ 14). Indeed, Diaz engaged in such unauthorized reception and interception of Cablevision's cable television programming services through her ongoing use of a "pirate" modified cable television descrambling and decoding device. (Id. ¶ 18). Records obtained by Cablevision indicate that on July 6, 1995, Diaz purchased such a "pirate" descrambling device from Teleview/Omega Holdings, L .L.C ./JRC Products Inc. ("Teleview/Omega"), of Elgin, Illinois, a manufacturer and distributor of "pirate" devices. (Id. ¶¶ 18-20; Ex. B). This device was capable of descrambling all "premium" and "pay-per-view" services on the System without payment to Cablevision. (Id. ¶ 21).
Prior to purchasing the unauthorized converter decoder, Diaz subscribed to Cablevision's Family service at an approximate cost of $25.95 per month. (Carroll Aft ¶ 19). After acquiring the converter-decoder, Diaz continued to pay Cablevision $25.95 per month for Family service through January 19, 2001 (approximately 66 months). (Id.). On January 19, 2001, Diaz added HBO, raising her monthly bill to approximately $57.65. (Id.). On December 4, 2001 (approximately 11 months later), she changed her subscription to include Cablevision's Optimum Preferred service, at a new total cost of $62.98 per month. (Id.). Therefore, during the period from her purchase of the unauthorized converter-decoder, through the date of the default judgment, Diaz paid Cablevision approximately $2,346.85 (($25.95 x 66 months) + ($57.65 x 11 months)).
Cablevision's papers do not indicate what services an Optimum Preferred customer receives. The Cablevision website indicates that this package currently includes over 80 channels and five pay-per-view services. (See http://www.cablevision.com-customer/product/cabletv.html).
Diaz knew that her use of an unauthorized converter-decoder would allow her to circumvent the security features of Cablevision's System, to descramble all of Cablevision's premium, pay-per-view, and other scrambled programming, and to gain access to Cablevision's programming services without paying for such services. (Compl. ¶ 22). In fact, unauthorized converter-decoders serve no lawful purpose on a cable system. Their sole function is to enable their users to receive unauthorized cable television programming without having to pay for the service. (Carroll Aft ¶ 23).
III. Discussion A. Statutory Damages
Sections 553 and 605 of Title 47 of the United States Code prohibit the unauthorized interception and reception of cable programming services. Barnes, 13 F. Supp.2d at 547-48 (citing Int'l Cablevision. Inc. v. Sykes, 75 F.3d 123, 133 (2d Cir. 1996)); Lokshin, 980 F. Supp. at 112 ("In contrast to section 553, which by its statutory language applies only to transmissions via cable systems, section 605(a) applies to "the interception of cable-borne, as well as over-the-air, pay television' where cable-borne transmissions originate as satellite transmissions. . . . Thus, when pay television programming is transmitted over both cable and satellite mediums, both statutes apply . . . ." (quoting Sykes, 75 F.3d at 130)).
47 U.S.C. § 553 (a) provides, in pertinent part, that:
No person shall intercept or receive . . . any communications service offered over a cable system, unless specifically authorized to do so by a cable operator or as may otherwise be specifically authorized by law.
47 U.S.C. § 605 provides, inter alia, that:
No person not being authorized by the sender shall intercept any radio communication and divulge or publish the . . . contents . . . of such intercepted communication to any person.
When a court determines that a defendant's conduct has violated both sections 553 and 605 of the Communications Act, a plaintiff may recover damages under one of those sections only. Sykes, 75 F.3d at 127; Barnes 13 F. Supp.2d at 548; Am Cablevision of Queens v. McGinn, 817 F. Supp. 317, 320 (E.D.N.Y. 1993). An aggrieved cable operator may, however, elect to recover damages under Section 605 in consideration of its higher damages award. Barnes, 13 F. Supp.2d at 548.
Cablevision's submissions establish that Diaz installed in her residence an unauthorized converter-decoder which could be used to descramble all of Cablevision's encrypted premium and pay-per-view cable television signals. (See Carroll Aft ¶¶ 20-21; Compl. ¶¶ 24-25). Diaz therefore has violated 47 U.S.C. § 553 and 605. Moreover, Cablevision possesses "proprietary rights" in the communications that Diaz intercepted without authorization and, therefore, is a "person aggrieved" within the meaning of 47 U.S.C. § 553 (c)(1) and 605 (e)(3)(A).
Cablevision has elected to recover damages under section 605, which provides that a court may award an aggrieved party a statutory damage award 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). Not surprisingly, Cablevision seeks to recover the maximum statutory damages allowable — $10,000 — in addition to its attorneys' fees and costs.
Although the statute provides little guidance on how damages should be assessed, some courts have calculated statutory damages based upon the monthly value of the defendant's unauthorized cable reception. See Lokshin, 980 F. Supp. at 113 (finding award of $125 per month for pilfered pay-per-view services to be reasonable); McG inn, 817 F. Supp. at 320 (imposing statutory damages of $250 per month per unauthorized decoder); Time Warner Cable of N.Y. v. Rivera, No. 94 Civ. 2339, 1995 WL 362429, at *4 (E.D.N.Y. June 8, 1995)(Gold, Mag. J.) (recommending approximately $1,000 in damages for eight months of pay-per-view usage). Other courts have simply imposed damages in a flat amount without explanation See e.g., Barnes, 13 F. Supp.2d at 548 (awarding Time Warner Cable a flat amount of $1,000 in statutory damages from each defendant).
To determine where on the statutory damages spectrum the award against Diaz should fall, it is appropriate to consider first the value and duration of the unauthorized cable reception. During the relevant period, because the cost of obtaining all of Cablevision's premium services was at least $80.95 per month, Diaz would likely have paid Cablevision at least $6,233.15 ($80.95 x 77 months) for such services had she not had an unauthorized device. During that period, however, she paid Cablevision only $2,346.85. Thus, if one assumes that Diaz used the device to access all of the available premium channels, Cablevision's loss due to that unauthorized access, not including pay-per-view, is at least $3,886.30 ($6,233.15-$2,346.85).
In addition, although it is unlikely that Diaz would have purchased every pay-per-view event each time it was shown, it is reasonable to assume that she would have watched at least three minimum-cost events per month. This would have resulted in an additional monthly loss to Cablevision of at least $14.85 ($4.95 x 3), or $1,143.45 through December 4, 2001 ($14.85 x 77 months). Thus, the overall loss that Cablevision has sustained due to Diaz's unauthorized access is $5,029.75 ($3,886.30 + $1,143.45).
As Magistrate Judge Ehis noted in Time Warner Cable of N.Y.C. v. Domsky, No. 96 Civ. 6851, 1997 U.S. Dist. LEXIS 13505, at *18 (S.D.N.Y. Sept 2, 1997), awarding damages simply for the value of the services stolen by a defendant would not be sufficient deterrence" since the penalty would merely be "the amount that should have been paid." Accordingly, it is appropriate to double the monthly damages for each month that Diaz was in all likelihood using an illegal decoder.Cablevision Sys. N.Y.C. Corp. v. Sencion, No. 01 Civ. 7069, 2001 WL 1586685, at *3 (S.D.N.Y. Dec. 12, 200 1)(Stein, J.); Domsky, 1997 U.S. Dist. LEXIS 13505, at *18. Because this produces a result in excess of the statutory maximum, Cablevision's damages should be limited to $10,000.
B. Attorneys' Fees
Cablevision also alleges that it incurred attorneys' fees and costs in the amount of $2,132.50 in the course of prosecuting this action. (See Aff. of Jennean R. Lee (undated)("Lee Aff"), ¶ 8).
Section 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, courts may consider and apply prevailing market rates "for similar services by lawyers of reasonably comparable skill, experience, and reputation." Gierlinger v. Gleason, 160 F.3d 858, 882 (2d Cir. 1998) (quoting Blum v. Stenson, 465 U.S. 886, 895 n. 1 1, 104 S.Ct. 1541, 1547, 79 L.Ed.2d 891 (1984)). Moreover, a court may rely on its own knowledge of private firm hourly rates in estimating reasonable attorneys' fees. Miele v. New York State Teamsters Conf. Pension 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). Attorneys' fees applications that do not contain such supporting data "should normally be disallowed." Id. at 1154. See also Kingvision Pay-Per-View v. The Body Shop, No. 00 Civ. 1089, 2002 WL 393091 at *5 (S.D.N.Y. Mar. 13, 2002)(Swain, J.) (denying award of attorneys' fees where information regarding how the fees were accumulated was not provided even though requested amount of $1,000 was reasonable).
In prosecuting this action against the defendant, Cablevision engaged the services of the law firm of Lefkowitz, Louis Sullivan, L.L.P., a firm which evidently handles many similar cases. On its behalf, attorney Jennean R. Lee, Esq., has submitted an affidavit to the Court setting forth: (a) the names of the two attorneys who worked on this matter; (b) the professional experience of those persons; and (c) the billing rate for Ms. Lee. (Lee Aff. ¶¶ 3-7). The only detailed billing, however, reflects Ms. Lee's attendance at a September 7, 2001, initial pretrial conference at which Defendant failed to appear. (See id. ¶ 5; Ex. C). Ms. Lee billed 4.5 hours for her attendance at that conference at an hourly rate of $145.00 per hour, for a total of $652.50. (Lee Aff. ¶ 5). While this seems high, it is explained by the fact that the offices of the Lefkowitz firm are in Jericho, New York. Accordingly, this sum should be allowed. The balance of the legal fees sought reflects certain flat rate billing for the drafting of the Summons and Complaint ($300), the Order to Show Cause for Default Judgment ($200), and a Memorandum in Support of Inquest ($800). (Id. ¶ 6-7). Whatever the reasonableness of these sums may be, the request for them fails to comply with the requirements of Carey and, therefore, must be denied. Pay-Per-View v. Jasper Grocery, 152 F. Supp.2d 438, 443 (S.D.N.Y. 2001)(Francis, Mag. J.); The Body Shop, 2002 WL 393091, at *5
C. Costs
Cablevision also seeks to recover $180 in costs, consisting of a $30 fee for process service, and filing fees in the amount of $150. (Lee Aff. ¶ 8). This request should be granted.
IV. Conclusion
For the reasons set forth above, I recommend that Cablevision be awarded damages, including attorneys' fees and the costs incurred in prosecuting this action, in the amount of $10,832.50.
V. Notice of Procedure for Filing of Objections to this Report and Recommendation
The parties are hereby directed that if they have any objections to this Report and Recommendation, they must, within ten days from today, make them in writing, file them with the Clerk of the Court, and send copies to the chambers of the Honorable Gerard E. Lynch, United States District Judge, and to the chambers of the undersigned, at the United States Courthouse, 500 Pearl Street, New York, New York 10007, and to any opposing parties. See 28 U.S.C. § 636 (b)(1); Fed.R.Civ.P. 6(a), 6(e), 72(b). Any requests for an extension of time for filing objections must be directed to Judge Lynch. Any failure to file timely objections will result in a waiver of those objections for purposes of appeal. See Thomas v. Am, 474 U.S. 140, 106 S.Ct. 466, 88 L.Ed.2d 435 (1985); Frank v. Johnson, 968 F.2d 298, 300 (2d Cir. 1992); 28 U.S.C. § 636 (b)(1); Fed.R.Civ.P. 6(a), 6(e), 72(b).