MARK A. KEARNEY, District Judge.
Federal law prohibits stealing encrypted pay-per-view telecasts. Congress defines the available measure of damages, including statutory damages, enhanced damages and reasonable attorney's fees and costs. Failing to answer a complaint admits liability and allows an award of reasonable attorney's fees and costs to the prevailing party against the defaulting party under the statute. But we must evaluate the proofs for statutory and enhanced damages. When, as here, the lawful distributor of the encrypted telecast does not pursue discovery or offer specific damages demonstrating its losses or the violator's profits, we review statutory and enhanced damages based on factors including the fee which should have been paid, evidence of a cover charge and willfulness against the persons responsible for the piracy. In the accompanying Judgment, we award statutory damages equal to the fee plus the aggregate cover charge as a profit with a 33% enhancement based on advertising against the entity responsible for promoting and presenting the pirated telecast. Absent evidence the managing member of the offending entity actually controlled the entity or knew of the piracy, we cannot impose personal liability on a person possibly owning interests in the entity or designated as a managing member.
J&J Sports Productions, Inc. purchased proprietary rights to distribute "Floyd Mayweather Jr. v. Andre Berto WBA/WBC Welterweight Championship Fight Program" ("Fight") by interstate pay-per-view encrypted transmission.
A fictitious entity UE Radio advertised, and then intercepted and showed the encrypted transmission of the Fight without purchasing rights from J&J.
At a noticed hearing, we reviewed an Instagram post announcing UE Radio would show the Fight at 2217 N. American Street.
Alerted by the advertising, J&J's private investigator went to 2217 N. American Street on Fight night and paid a $20 cover charge. The facility contained four 46" televisions showing these boxing matches.
It is undisputed neither UE Kitchen, LLC, d/b/a UE Radio nor Timothy Allen, paid J&J for the right to show the September 12, 2015 pay-per-view telecast of the Fight. J&J concedes it lacks evidence of UE Kitchen, LLC, UE Radio, or Timothy Allen ever pirating pay-per-view telecasts other than showing the Fight.
J&J sued Timothy Allen, individually and d/b/a UE Radio and UE Kitchen, LLC d/b/a UE Radio. Although served, no Defendant answered the Complaint. The Clerk of Court entered default and we scheduled a hearing on the damages to be awarded in a judgment. We ordered J&J to personally serve each Defendant. It did so.
J&J argued we should award damages against UE Kitchen, LLC and against Timothy Allen, individually because Mr. Allen is the managing member of UE Kitchen, LLC. We asked J&J what evidence it adduced to show Mr. Allen received a financial benefit from showing the Fight to support the award of damages. J&J argued we should award damages against Mr. Allen because Mr. Allen admitted the allegation he managed UE Kitchen, LLC by defaulting. J&J further argued we are impeding it from getting statutory damages when J&J does everything asked of it and Defendants refuse to answer the summons and in our equitable powers we should permit him to recover against Mr. Allen, individually, without evidence of a financial benefit.
Absent discovery, J&J argues we should enter its requested amount of damages simply because it seeks them and the Defendants do not oppose. We appreciate the statutory purposes including deterring this piracy, but we cannot abandon fundamental principles of evidence and proof of damages. If J&J wants to maximize deterrence through substantial damages against those it deems responsible for the piracy, it can seek discovery before proceeding on a hearing seeking a money judgment and then present admissible evidence warranting enhanced damages.
While a default admits liability, J&J must demonstrate its damages against Timothy Allen, individually and d/b/a UE Radio and UE Kitchen, LLC d/b/a UE Radio. J&J seeks statutory damages in lieu of actual damages, enhanced damages due to the willfulness of the piracy and to deter further piracy and attorney's fees and costs. We ordered J&J to file a post-hearing affidavit demonstrating the reasonableness of its attorney's fees and out-of-pocket costs.
J&J may elect statutory damages in lieu of actual damages.
The evidence is undisputed. J&J charges $2,000 for licensing this telecast at a facility with a capacity of 100 persons. J&J elected not to take discovery and did not offer evidence as to UE Radio's profits. While we could cap those profits at $1,460, we lack evidence as to who attended to watch the pirated Fight.
But in applying the factors, J&J adduced evidence of four televisions with a 46" flat screen television and three televisions in the bar area showing the pirated Fight. We do not know the size of the facility housing the 73 patrons and at least one hostess. We do not know whether the patrons spent other money while there. The undisputed evidence is a $20 cover charge for 73 persons.
We calculate statutory damages of $3,460 representing the fee which should have been paid for the telecast and the maximum profit of $1,460. We have no evidence to award more in statutory damages. We award $3,460 statutory damages against UE Kitchen LLC because it owns and operates UE Radio.
We may award enhanced damages of up to $100,000 for each willful violation committed "for purposes of direct or indirect commercial advantage or private financial gain."
Our court of appeals has not defined the factors for an appropriate amount of enhanced damages. Our colleagues have adopted alternative measures to calculate an amount necessary to deter the prohibited conduct. In measuring enhanced damages, some courts apply a multiplier of at least three to six times the award of statutory or actual damages.
Instead, in a case where we have no evidence of repeated conduct, we find the deterrence goals of enhanced damages can be evaluated through factors described in Joe Hand Promotions, Inc. v. Michelina Enterprises, Inc.
As in Michelina, J&J adduced no evidence of UE Kitchen, LLC or Mr. Allen being repeat offenders. We also have no evidence of specific profits. But we have evidence of a $20 cover charge. While we have no evidence of substantial profits, we can fairly find profits from between 64 and 73 people paying a $20 cover charge. J&J adduced evidence of advertising through an Instagram post by "bread _like_ dat" announcing UE Radio would show the "Floyd Mayweather Jr. v. Andre Berto WBA/WBC Welterweight Championship Fight Program." We have no idea of who he is or his relationship to UE Radio, UE Kitchen, LLC, or Mr. Allen. We also have no evidence of J&J's actual damages.
On balance, we find willfulness from the advertising which we cannot discount simply because the social media came from an unknown "bread_like_dat." UE Radio is prominently mentioned in the advertisement. The undisputed evidence is between 64 and 73 people attended this exhibition. But the other four factors do not warrant a substantial premium of the statutory damages. Our evaluation of the adduced evidence, and our allegiance to the statutory purposes of deterrence, requires we award $1,141.80 as enhanced damages, representing a 33% enhanced premium of the statutory damages.
J&J seeks to impose liability for statutory and enhanced damages upon Timothy Allen individually. Mr. Allen can be individually liable if he "(1) has the right and ability to supervise the violative activity, although [he] need not actually be supervising, because [he] need not know of the violative activity, and (2) has a direct financial interest in the violation, i.e., financial benefits, even if not proportional or precisely calculable, that directly flows from the violative activity."
Mr. Allen's liability is shown by more than mere conclusory allegations, as in Michelina. Mr. Allen, by defaulting, admitted he is the managing member of UE Kitchen, LLC. But this is it. Unlike Chauca, J&J adduced no evidence of Mr. Allen ordering the telecast, advertising the telecast or his presence in the facility for the showing.
In its caption to the Complaint, J&J sued Timothy Allen d/b/a UE Radio.
J&J's caption naming Timothy Allen d/b/a UE Radio, without more, is not enough for us to impose personal liability upon him for statutory and enhanced damages as the owner of UE Radio. In Joe Hand Promotions, Inc. v. Murray, Joe Hand sued Jane Murray d/b/a Brucekies Pub in the caption.
J&J only named Timothy Allen as doing business as UE Radio in its caption and, as in Murray, there are not sufficient allegations to impose liability where the only allegations are Mr. Allen managed the limited liability company doing business as UE Radio and supervised and directed UE Radio's employees. We do not award damages against Timothy Allen d/b/a UE Radio because J&J fails to allege Mr. Allen does business as UE Radio. Absent a defaulted allegation or proof at our noticed hearing, we cannot find Mr. Allen does business as UE Radio.
Congress directs us to award full costs and reasonable attorneys' fees to "an aggrieved party who prevails."
We award costs and attorneys' fees to J&J as the prevailing party against both UE Kitchen, LLC and Timothy Allen. While we only award statutory and enhanced damages against UE Kitchen, LLC, J&J prevailed as to liability against both UE Kitchen, LLC and Timothy Allen because we rendered judgment against both parties in favor of J&J. J&J is the prevailing party against Timothy Allen "regardless of the amount of damages awarded."
J&J submitted detailed unredacted invoices of its counsel's time and out of pocket expenses incurred in pursuing Defendants. J&J requests $2,061.72 in costs and $7,382.00 in attorneys' fees. We carefully reviewed the time entries and find they are reasonable in the amount and allocation of hours among attorneys and paralegals.
The hourly rates for experienced attorneys in this District are also reasonable and consistent with our earlier findings of reasonable rates in commercial matters. The billed hourly rates of J&J's national ($500) and local ($400) counsel are reasonable for attorneys of their experience in this District. Absent objection, we consider the present billing rates for attorneys in this District since 2015 known in this Court.
Following a hearing, we find J&J is entitled to default and finding of liability against Defendants which permits an award of reasonable attorney's fees and costs as the prevailing party. We also award statutory damages and enhanced damages against UE Kitchen, LLC. We recognize Congress' purpose in stopping this piracy and agree an effective way of doing so would include damages against the individual who is named as a managing member of the limited liability company which pirated the Fight and charged a $20 cover to watch the Fight. But the lawful distributor of the telecast rights must adduce evidence to allow findings of substantial enhanced damages and personal liability of the individual owning the business. It elected not to do so here. In the accompanying Judgment, we enter a damages judgment of $14,045.52 against UE Kitchen, LLC. and $9,443.72 against Timothy Allen.