HURLEY, Senior District Judge:
By Order dated July 15, 2010, the Court entered a default judgment against defendants and referred this matter to Magistrate
On February 16, 2011, plaintiff filed proof of service of a copy of the Report and Recommendation upon the defendants. More than fourteen (14) days have elapsed since service of the Report and Recommendation, and neither party has filed any objections to it.
Pursuant to 28 U.S.C. § 636(b) and Fed. R.Civ.P. 72, this Court has reviewed the Report and Recommendation for clear error, and finding none, now concurs in both its reasoning and its result. Accordingly, this Court adopts the February 14, 2011 Report and Recommendation of Judge Tomlinson as if set forth herein. The Court therefore directs that judgment be entered as follows: plaintiff recovers from defendant Pizzeria y Pupuseria Santa Rosita, Inc., d/b/a, Santa Rosita Restaurante y Pupuseria the amount of $20,350.00. The Court further directs the Clerk of Court to vacate the entry of default judgment against defendant Noe G. Valle. Upon entry of judgment, the Clerk of Court shall close this case.
SO ORDERED.
A. KATHLEEN TOMLINSON, United States Magistrate Judge:
Plaintiff Circuito Cerrado, Inc. ("Plaintiff" or "CCI") commenced this action against Defendants Pizzeria Y Pupuseria Santa Rosita, Inc., d/b/a Santa Rosita Restaurante Y Pupuseria ("Pizzeria Y") and Noe G. Valle, (collectively, "Defendants") for violations of the Federal Communications Act of 1934 ("FCA"), codified at 47 U.S.C. §§ 605 and 553. See DE 1. After Defendants failed to answer or otherwise move with respect to the Complaint, Defendants' default was noted by the Clerk and the Plaintiff moved for default judgment. See DE 5, 7. District Judge Hurley entered a default judgment against the Defendants and referred this matter to me for an inquest to determine and recommend what damages, if any, are appropriate in this matter, including any attorneys' fees.
The Plaintiff seeks an award of statutory and enhanced damages equaling $20,000, plus 9% pre-judgment interest and costs, for a total of $22,120. See DE 11-12. Based on the information submitted by Plaintiff and for the reasons set forth below, I respectfully recommend to Judge Hurley that damages be awarded against only Defendant Pizzeria Y in the amount of $ 20,350.
The Plaintiff entered into a closed-circuit television license agreement whereby it received the exclusive right to exhibit the closed-circuit telecast of the June 10, 2009 CONCACAF World Cup Qualifier Tournament which included the Honduras v. El Salvador match (subsequently referred to as the "Event") at various commercial locations throughout New York. See Compl. ¶ 8. The Event could only be exhibited in an establishment that was contractually authorized to do so. Id. ¶ 10. Therefore, the transmission of the Event was electronically coded or "scrambled" and could only be seen clearly after it was
Pursuant to the license agreement, Plaintiff marketed and distributed the closed-circuit rights by contracting with various establishments for a fee. Id. ¶ 11. Those establishments which contracted with Plaintiff were provided with the decoding equipment and satellite coordinates necessary to receive the signal of the Event. Id. ¶ 14. Defendants, however, did not contract with Plaintiff to obtain the rights to broadcast the Event. Id. ¶ 13. Nevertheless, on June 10, 2009, Defendants intercepted and/or received the signal of the Event and then transmitted, divulged and published the same to its patrons. Id. ¶ 15.
A default constitutes an admission of all well-pleaded factual allegations in the complaint and the allegations as they pertain to liability are deemed true. Joe Hand Promotions, Inc. v. El Norteno Rest. Corp., No. 06-CV-1878, 2007 WL 2891016, at *2 (E.D.N.Y. Sept. 28, 2007) (citing Greyhound Exhibitgroup, Inc. v. E.L. U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992), cert. denied, 506 U.S. 1080, 113 S.Ct. 1049, 122 L.Ed.2d 357 (1993)); BMG Music v. Pena, No. 05-CV-2310, 2007 WL 2089367, at *2 (E.D.N.Y. July 19, 2007). The Complaint alleges violations of 47 U.S.C. §§ 553(a)(1) and 605(a). See Compl. ¶¶ 21-35. Although these sections overlap,
J & J Sports Prods. v. 291 Bar & Lounge, 648 F.Supp.2d 469, 471 (E.D.N.Y. Aug. 19, 2009). However, in light of the Second Circuit's determination that a satellite signal is considered a radio communication under Title 47 (see Int'l Cablevision, Inc. v. Sykes, 997 F.2d 998, 1008 (2d Cir. 1993)), "both prohibit the unauthorized reception of any cable television programming services which originate as satellite-delivered radio communications." Joe Hand Promotions, Inc. v. Fofana, No. 06 CV 2099, 2007 WL 2298372, at *4 (citing Cmty. Television Sys., Inc. v. Caruso, 284 F.3d 430, 434-35 (2d Cir. 2002)); see also J & J Sports Prods. v. Welch, No. 10-CV0159, 2010 WL 4683744, at *2 (E.D.N.Y. Nov. 10, 2010) ("Section 553 and 605 apply, respectively, to cable and radio communications, but both provisions apply where a cable-borne transmission originates as a radio transmission.").
Since Defendants' default is deemed an admission of all the well-pleaded allegations in Plaintiff's complaint, Defendants have thus admitted to misappropriating Plaintiff's licensed exhibition of the Event, the transmission of which was electronically coded or "scrambled," when they intercepted, received and transmitted the Event without authorization. Compl. ¶¶ 12-19. Although the Complaint does not clearly state that the Event originated as a satellite signal, Plaintiff mentions that in order for the signal to be received, it had to be decoded with electronic decoding equipment along with satellite coordinates. Id. ¶¶ 12-14. This reference provides a sufficient basis to establish that the Event originated with a radio transmission and that Defendants' unauthorized interception violated Sections 553 and 605. See 291 Bar & Lounge, 648 F.Supp.2d at 472-73.
However, a more difficult question is whether individual liability should be imposed against Defendant Noe G.
Here, the Plaintiff not only fails to allege that Defendant Valle was present on the night of the violation, but it also leaves out the necessary allegation that Valle authorized or supervised the violation. Courts which have more recently addressed this issue of a lack of basic pleading have sided against individual liability. See 291 Bar & Lounge, 648 F.Supp.2d at 473 (finding that "plaintiff has made no allegation that [individual defendant] was present for the violation, that he authorized or controlled it, or that he reaped commercial profit from it."); J & J Sports Prods v. Daley, No. CV 06-0238, 2007 WL 7135707, at *4 (E.D.N.Y. Feb. 15, 2007) ("[T]here is nothing other than speculation to support the conclusion that [individual defendant] played any part in the violations of the FCA committed by [the defendant establishment], and even less to support the conclusion that any role he did play would warrant imposing individual liability.") Conversely, the courts which have found individual liability are grounded in somewhat stronger factual contentions than the case at bar.
A default judgment entered on the well-pleaded allegations in the complaint establishes a defendant's liability. See Garden City Boxing Club, Inc. v. Morales, No. 05-CV-0064, 2005 WL 2476264, at *3 (E.D.N.Y. Oct. 7, 2005) (citing Bambu Sales, Inc. v. Ozak Trading, Inc., 58 F.3d 849, 854 (2d Cir. 1995)). Plaintiff, however, must still prove damages. See Credit Lyonnais Sec., Inc. v. Alcantara, 183 F.3d 151, 155 (2d Cir. 1999). Therefore, the only question remaining is whether Plaintiff has provided adequate support for the relief he seeks. Greyhound Exhibitgroup, Inc., 973 F.2d at 158. The moving party need only prove "that the compensation sought relate to the damages that naturally flow from the injuries pleaded." Id. at 159. In addition, the moving party is entitled to all reasonable inferences from the evidence it offers. Au Bon Pain Corp. v. Artect, Inc., 653 F.2d 61, 65 (2d Cir. 1981).
As an initial matter, despite the numerous opportunities provided to Plaintiff to specifically identify the damages sought under the FCA (see DE 9 and Electronic Order of Jan. 26, 2011), the Court nevertheless received papers alleging actual and statutory damages under both Sections 553 and 605. See Hooten Supp. Aff. ¶¶ 8-9, 15-25. However, the law in this Circuit is clear that a plaintiff may recover under only one of the statutes. See, e.g., 291 Bar & Lounge, 648 F.Supp.2d at 472; Joe Hand Promotions, Inc. v. El Norteno Restaurant Corp., No. 06 CV 1878, 2007 WL 2891016, at *3 (E.D.N.Y. Sept. 28, 2007); Kingvision Pay-Per View, Ltd. v. Autar, 426 F.Supp.2d 59, 62 (E.D.N.Y. 2006); New Contenders, Inc. v. Diaz Seafood Corp., 96 Civ. 4701, 1997 WL 538827, at *1 (S.D.N.Y. Sept. 2, 1997) (citing Int'l Cablevision Inc. v. Sykes, 75 F.3d 123, 129 (2d Cir. 1996)).
Because Plaintiff failed to specifically identify under which Section it seeks to recover, the Court will assess damages under § 605 since that provision allows for a greater recovery than does § 553. See J & J Sports Prods., Inc. v. Alvarez, No. 07 Civ. 8852, 2009 WL 3096074, at *4 (S.D.N.Y. Sept. 25, 2009). Furthermore, despite the fact that Plaintiff argues its actual damages are $13,242.50, the Court is not convinced by the arguments proffered by Plaintiff to support this figure. Instead, the Court finds that Plaintiff's actual damages are too difficult to ascertain. See 291 Bar & Lounge, 648 F.Supp.2d at 474 n. 3 ("`As actual damages frequently prove difficult to establish, plaintiffs generally elect to recover statutory damages instead' under 47 U.S.C. § 605(e)."); Kingvision Pay-Per-View Ltd. v. Olivares, No. 02 Civ. 6588, 2004 WL 744226, at *3 (S.D.N.Y. Apr. 5, 2004) ("Statutory damages are appropriate where actual damages are difficult to prove."). Therefore, this Court, like the majority of courts handling similar actions, will award Plaintiff statutory damages as permitted under § 605.
Section 605(e) of the FCA permits an aggrieved party to elect to
Plaintiff alleges that the unauthorized broadcast occurred on June 10, 2009. See Hooten Supp. Aff. ¶ 2. Although what constitutes a "violation" is not defined in § 605, "most cases applying the statute in a commercial context have interpreted the showing of an event on a single night as one violation." Garden City Boxing Club, Inc. v. Perez, No. 05 CV 3713, 2006 WL 2265039, at *5 (E.D.N.Y. Aug. 8, 2006). Therefore, the Court is only dealing with one § 605 violation here. Furthermore, a private investigator who was present the night of the violation stated that he counted 150 patrons present at Defendants' broadcast of the Event. See Pl.'s Mem. Ex. A. Accordingly, Plaintiff argues that damages are calculated by multiplying 150 patrons by $54.95 (the residential pay-per-view cost) totaling $8,242.50. See Hooten Supp. Aff. ¶ 22. This figure, which falls within the allowable statutory damages provision under § 605 is what the Court believes should resemble the statutory damages available to Plaintiff.
The Plaintiff maintains that its damages should be enhanced to $20,000 pursuant to § 605. See Hooten Supp. Aff. ¶ 32. Section 605 states that
47 U.S.C. § 605(e)(3)(C)(ii). "Willfulness is defined as `disregard for the governing statute and an indifference to its requirements.'" J & J Sports Prods. v. Echeverria, No. 06 CV 2894, 2007 WL 1160423, at *3 (E.D.N.Y. Mar. 16, 2007) (quoting Trans World Airlines, Inc. v. Thurston, 469 U.S. 111, 127, 105 S.Ct. 613, 83 L.Ed.2d 523 (1985)). It has been determined that "[t]he broadcast of an event
The Plaintiff alleges that Defendants' interception, receipt and broadcast were done knowingly and unlawfully as they could not have obtained the transmission of the Event without committing wrongful acts. See Hooten Supp. Aff. ¶¶ 10-14. This Court agrees. See 291 Bar & Lounge, 648 F.Supp.2d at 475 ("[I]t is difficult to see how the defendant could have involuntarily intercepted—and exhibited—the Fight, as the transmission had to be decoded with electronic decoding equipment in order for the signal to be received and displayed."); Time Warner Cable v. Googies Luncheonette, Inc., 77 F.Supp.2d 485, 490 (S.D.N.Y. 1999) ("Signals do not descramble spontaneously, nor do television sets connect themselves to cable distribution systems."). Based on Defendants' willfulness, the Plaintiff argues that damages should be enhanced to $20,000. See Hooten Supp. Aff. ¶ 32.
However, the Plaintiff has not presented any evidence of prior violations by the Defendants. In addition, the only "actual damages" for which Plaintiff has provided supporting evidence is the licensing fee of $700 which Defendants would have had to pay to lawfully show the Event. See Hooten Supp. Aff. Ex. B; Pl.'s Mem. Ex. B ¶ 8 ("For example, for this particular event, if a commercial establishment had a maximum fire code occupancy of 90 persons, the commercial sublicense fee would have been $700.00."). Furthermore, in addition to not providing evidence for the remaining factors, Plaintiff acknowledges that those who pirate "do not generally advertise the fact;" "it is extremely unlikely that a pirate establishment would increase the costs of food or drink;" and pirate establishments "do not, and likely will not, ever charge a cover or door charge to their customers." See Pl.'s Mem. Ex. B ¶¶ 15-17.
Despite these shortcomings, the Plaintiff is entitled to enhanced damages "because the record demonstrates that the defendants affirmatively and willfully intercepted the Event for financial gain, and that there is no way that the defendants could have inadvertently intercepted plaintiff's broadcast." Welch, 2010 WL 4683744, at *4. In these circumstances, "it is appropriate to assess enhanced damages in conjunction with statutory damages." Id. at *5. Plaintiff cites to numerous cases where the court awarded enhanced damages that were three times the statutory damages. However, those cases involved substantially different circumstances from those present here in that they all involved significantly smaller statutory damage awards. In the majority of the cases cited by Plaintiff, the statutory damages awarded were $1,000, the lowest amount allowed under § 605. The smaller awards were the result of the per-patron computation in those cases yielding a figure below the $1,000 threshold. See J & J Sports Prods., Inc. v. Forbes, No. 07-CV-4394, 2008 WL 5263732, at *5-6 (E.D.N.Y. Dec. 17, 2008); J & J Sports Prods., Inc. v. Rodrigues, No. 05 CV 5805, 2007 WL 1726462, at *6-7 (E.D.N.Y. Apr. 19, 2007); J & J Sports Prods., Inc. v. Drake, No. 06 CV 246, 2006 WL 2927163, at *4-5 (E.D.N.Y. Oct. 11, 2006). And in no case was the statutory amount above $3,000. See Hot Shots, 2010
However, Plaintiff's request for total statutory and enhanced damages of $20,000 is not unreasonable in light of Defendants' willful violation and interception of the Event for financial gain as well as the statute's objective of deterring future violations. In fact, such an enhancement would amount to less than two times the amount of statutory damages awarded. See Welch, 2010 WL 4683744, at *5 ("In light of the statutory objective of deterring future violations of 47 U.S.C. § 605, coupled with defendants' willful violation of this provision, the court finds that enhanced damages of $9,341.50, or two times the amount of basic statutory damages, are appropriate in this case."). In light of these decisions from cases with similar circumstances, I respectfully recommend to Judge Hurley that statutory and enhanced damages be awarded to the Plaintiff in the amount of $20,000.
In addition, the Plaintiff asserts that it is entitled to interest calculated at 9% running from June 10, 2009 for a total of $1,650. See Hooten Supp. Aff. ¶¶ 34-35. However, § 605 does not refer at all to interest and the "majority of courts to have considered the issue have denied an award of prejudgment interest." See Hot Shots, 2010 WL 3522809, at *3. Although a few courts in this District have granted pre-judgment interest at a rate of 9% pursuant to N.Y. C.P.L.R. § 5004 under similar circumstances, the more recent decisions addressing this issue have denied such requests. See, e.g., Hot Shots, 2010 WL 3522809, at *3; Autar, 426 F.Supp.2d at 65. The leading case on this issue, Kingvision Pay-Per-View Ltd. v. Olivares, No. 02 Civ. 6588, 2004 WL 744226 (S.D.N.Y. Apr. 5, 2004), denied pre-judgment interest and reasoned that since claims for punitive damages are an exception to pre-judgment interest under N.Y. C.P.L.R., "[s]tatutory damages under the Communication Act are analogous to punitive damages in that they are designed to deter others from similar infringing activity." Olivares, 2004 WL 744226, at *5. Based on this reasoning and the current status of the law on this issue, I respectfully recommend that pre-judgment interest not be awarded to Plaintiff.
Lastly, the Plaintiff argues that under § 605, it is entitled to an award of $470 in costs and disbursements. See Hooten Supp. Aff. ¶¶ 33-34. Section 605 expressly provides that if a violation has occurred, the court "shall direct the recovery of full costs, including awarding reasonable attorneys' fees to an aggrieved party who prevails." See 47 U.S.C. § 605(e)(3)(B)(iii). Based on this language, courts in this Circuit have held that under § 605, the award of costs and attorneys' fees are mandatory. See Autar, 426 F.Supp.2d at 65.
For the reasons set forth above, I respectfully recommend to Judge Hurley that damages be awarded against Defendant Pizzeria Y in the amount of $20,350.
Pursuant to 28 U.S.C. § 636(b)(1)(c) and Rule 72 of the Federal Rules of Civil Procedure, the parties shall have fourteen (14) days from service of this Report and Recommendation to file written objections. See also Fed.R.Civ.P. 6(a) and (e). Such objections shall be filed with the Clerk of the Court via ECF. A courtesy copy of any objections filed is to be sent to the chambers of the Honorable Denis R. Hurley, and to the chambers of the undersigned. Any requests for an extension of time for filing objections must be directed to Judge Hurley prior to the expiration of the fourteen (14) day period for filing objections. Failure to file objections will result in a waiver of those objections for purposes of appeal. Thomas v. Arn, 474 U.S. 140, 155, 106 S.Ct. 466, 88 L.Ed.2d 435 (1985); Beverly v. Walker, 118 F.3d 900, 901 (2d Cir.), cert. denied, 522 U.S. 883, 118 S.Ct. 211, 139 L.Ed.2d 147 (1997); Savoie v. Merchants Bank, 84 F.3d 52, 60 (2d Cir. 1996).
Plaintiff's counsel is directed to serve a copy of this Report and Recommendation upon the Defendants forthwith by overnight mail and first class mail and to file proof of service on ECF.