JACQUELYN D. AUSTIN, Magistrate Judge.
This matter is before the Court on a motion for summary judgment filed by Plaintiff against Defendant Chris Ruegsegger [Doc. 37]; a motion for default judgment filed by Plaintiff against Defendant Upstate Recreation d/b/a Leeg's Nightclub [Doc. 40]; and a motion to dismiss filed by Defendant Chris Ruegsegger [Doc. 42]. Pursuant to the provisions of 28 U.S.C. § 636(b) and Local Civil Rule 73.02(B)(2)(e), D.S.C., this magistrate judge is authorized to review all pre-trial matters in cases involving litigation by individuals proceeding pro se and to submit findings and recommendations to the District Court.
Plaintiff filed this case on September 11, 2013, asserting claims under the Communications Act, 47 U.S.C. § 605, and the Cable Communications Policy Act, 47 U.S.C. § 553, as well as a state law claim for conversion. [Id.] Plaintiff filed a motion for summary judgment against Defendant Chris Ruegsegger ("Ruegsegger") on March 6, 2014. [Doc. 37.] On March 17, 2014, pursuant to Roseboro v. Garrison, 528 F.2d 309 (4th Cir. 1975), Ruegsegger was advised to respond to the motion and of the possible consequences if he failed to adequately respond. [Doc. 38.] Ruegsegger filed a response in opposition on March 18, 2014 [Doc. 41], and Plaintiff filed a reply on March 28, 2014 [Doc. 45].
Defendant Upstate Recreation d/b/a Leeg's Nightclub ("Upstate Recreation") was served on October 28, 2013 [Doc. 19] but failed to file an answer or otherwise respond to the Complaint. The Clerk's Entry of Default was filed as to Upstate Recreation on January 22, 2014. [Doc. 35.] Plaintiff filed a motion for default judgment on March 7, 2014 [Doc. 40], and Upstate Recreation failed to respond to the motion for default judgment.
Ruegsegger filed a motion to dismiss
Plaintiff is a Pennsylvania corporation with its principal place of business in Feasterville, Pennsylvania. [Doc. 1 ¶ 5.] Upstate Recreation is a South Carolina eleemosynary incorporation that does (or did) business as Leeg's Nightclub at 3500 Wade Hampton Boulevard, Taylors, South Carolina 29687.
On September 24, 2011, an investigator for Plaintiff, Shane Southern ("Southern"), visited Leeg's Nightclub,
Based on these observations, Plaintiff's Complaint alleges that Defendants and/or their agents, servants, workmen, and employees unlawfully intercepted, received, published, divulged, and exhibited the Program and that such interception, receipt, publication, divulgence, and exhibition was done willfully and for purposes of direct or indirect commercial advantage or private financial gain. [Doc. 1 ¶¶ 22, 23.] Plaintiff further alleges that Ruegsegger had the right and ability to supervise the alleged misconduct and had an obvious and direct financial interest. [Id. ¶¶ 24, 25.]
Section 553 prohibits the unauthorized interception or receipt of cable programming, while § 605 prohibits the use of equipment for the purpose of unauthorized decryption of satellite cable programming. See 47 U.S.C. § 553; 47 U.S.C. § 605. Section 553 provides, in relevant part,
47 U.S.C. § 553(a)(1). Statutory damages under § 553 range from $250 to $10,000 for all violations with a maximum $50,000 enhancement for willfulness. 47 U.S.C. §§ 553(c)(3)(A)(ii), 553(c)(3)(B). Additionally, § 553 allows for an award of attorney's fees and costs. 47 U.S.C. § 553(c)(2)(C). Section 605 provides, in relevant part,
47 U.S.C. § 605(a). Statutory damages under § 605 range from $1,000 to $10,000 with a $100,000 maximum enhancement for willfulness. 47 U.S.C. §§ 605(e)(3)(C)(i)(II), 605(e)(3)(C) (ii). Additionally, § 605 provides for a mandatory award of attorney's fees and costs. 47 U.S.C. § 605(e)(3)(B)(iii). Both § 553 and § 605 permit any aggrieved party to bring suit against the violator in federal court.
"Conversion is defined as the unauthorized assumption in the exercise of the right of ownership over goods or personal chattels belonging to another to the exclusion of the owner's rights." Moseley v. Oswald, 656 S.E.2d 380, 382 (S.C. 2008) (citation omitted). To prove the tort of conversion, "the plaintiff must establish either title to or right to the possession of the personal property." Id.; see also Gignilliat v. Gignilliat, Savitz & Bettis, L.L.P., 684 S.E.2d 756, 763 (S.C. 2009) (discussing the availability of a conversion claim for documented, intangible property rights).
Rule 55(b)(2) of the Federal Rules of Civil Procedure provides for the entry of default judgment by a court against a party in default. When a defendant defaults, the court is to accept as true the well-pleaded factual allegations in the complaint as to defendant's liability. See Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780-81 (4th Cir. 2001). If the court determines that liability is established, it must then determine the appropriate amount of damages. Ryan, 253 F.3d at 780-81. Unlike allegations of fact, the court does not accept allegations regarding damages as true, but rather makes its own independent determination. E.g., Credit Lyonnais Secs. (USA), Inc. v. Alcantara, 183 F.3d 151, 154 (2d Cir. 1999). In this regard, "[a] default judgment must not differ in kind from, or exceed in amount, what is demanded in the pleadings." Fed. R. Civ. P. 54(c).
Here, Plaintiff has submitted additional proof through Southern's affidavit. As stated, the affidavit provides evidence that the Program was displayed on at least one television at Leeg's Nightclub
Under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a motion to dismiss for failure to state a claim should not be granted unless it appears certain that the plaintiff can prove no set of facts which would support her claim and entitle her to relief. When considering a motion to dismiss, the court should "accept as true all well-pleaded allegations and should view the complaint in a light most favorable to the plaintiff." Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993). However, the court "need not accept the legal conclusions drawn from the facts" nor "accept as true unwarranted inferences, unreasonable conclusions, or arguments." Eastern Shore Mkts., Inc. v. J.D. Assocs. Ltd. P'ship, 213 F.3d 175, 180 (4th Cir. 2000). Further, for purposes of a Rule 12(b)(6) motion, a court may rely on only the complaint's allegations and those documents attached as exhibits or incorporated by reference. See Simons v. Montgomery Cnty. Police Officers, 762 F.2d 30, 31 (4th Cir. 1985). If matters outside the pleadings are presented to and not excluded by the court, the motion is treated as one for summary judgment under Rule 56 of the Federal Rules of Civil Procedure. Fed. R. Civ. P. 12(d).
With respect to well-pleaded allegations, the United States Supreme Court explained the interplay between Rule 8(a) and Rule 12(b)(6) in Bell Atlantic Corp. v. Twombly:
550 U.S. 544, 555 (2007) (footnote and citations omitted); see also 5 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1216, at 235-36 (3d ed. 2004) ("[T]he pleading must contain something more . . . than a bare averment that the pleader wants compensation and is entitled to it or a statement of facts that merely creates a suspicion that the pleader might have a legally cognizable right of action.").
"A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556). "The plausibility standard is not akin to a `probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. (citing Twombly, 550 U.S. at 556). The plausibility standard reflects the threshold requirement of Rule 8(a)(2)—the pleader must plead sufficient facts to show he is entitled to relief, not merely facts consistent with the defendant's liability. Twombly, 550 U.S. at 557 (quoting Fed. R. Civ. P. 8(a)(2)); see also Iqbal, 556 U.S. at 678 ("Where a complaint pleads facts that are `merely consistent with' a defendant's liability, it `stops short of the line between possibility and plausibility of "entitlement to relief.'"" (quoting Twombly, 550 U.S. at 557)). Accordingly, the plausibility standard requires a plaintiff to articulate facts that, when accepted as true, demonstrate that the plaintiff has stated a claim that makes it plausible the plaintiff is entitled to relief. Francis v. Giacomelli, 588 F.3d 186, 193 (4th Cir. 2009) (quoting Iqbal, 556 U.S. at 678).
Here, Ruegsegger has provided no basis to dismiss the Complaint. Instead, Ruegsegger makes conclusory allegations that this action is fraudulent, full of misinformation and lies, and based on false information. [Doc. 42.] However, as stated, Plaintiff's allegations are taken as true on a motion to dismiss. Accordingly, the motion to dismiss should be denied.
Rule 56 of the Federal Rules of Civil Procedure states, as to a party who has moved for summary judgment:
Fed. R. Civ. P. 56(a). A fact is "material" if proof of its existence or non-existence would affect disposition of the case under applicable law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). An issue of material fact is "genuine" if the evidence offered is such that a reasonable jury might return a verdict for the non-movant. Id. at 257. When determining whether a genuine issue has been raised, the court must construe all inferences and ambiguities against the movant and in favor of the non-moving party. United States v. Diebold, Inc., 369 U.S. 654, 655 (1962).
The party seeking summary judgment shoulders the initial burden of demonstrating to the court that there is no genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the movant has made this threshold demonstration, the non-moving party, to survive the motion for summary judgment, may not rest on the allegations averred in his pleadings. Id. at 324. Rather, the non-moving party must demonstrate specific, material facts exist that give rise to a genuine issue. Id. Under this standard, the existence of a mere scintilla of evidence in support of the non-movant's position is insufficient to withstand the summary judgment motion. Anderson, 477 U.S. at 252. Likewise, conclusory allegations or denials, without more, are insufficient to preclude granting the summary judgment motion. Ross v. Commc'ns Satellite Corp., 759 F.2d 355, 365 (4th Cir. 1985), overruled on other grounds, 490 U.S. 228 (1989). "Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Factual disputes that are irrelevant or unnecessary will not be counted." Anderson, 477 U.S. at 248. Further, Rule 56 provides in pertinent part:
Fed. R. Civ. P. 56(c)(1). Accordingly, when Rule 56(c) has shifted the burden of proof to the non-movant, he must produce existence of a factual dispute on every element essential to his action that he bears the burden of adducing at a trial on the merits.
The evidence of record establishes that the Program was unlawfully intercepted and displayed on at least one television at Leeg's Nightclub. Plaintiff had the exclusive commercial distribution rights for the Program and any commercial establishment that wished to distribute the Program had to contract with Plaintiff for a sublicensing agreement. [Doc. 37-6 ¶¶ 3, 8.] Plaintiff did not sublicense the Program to Defendants. [Id. ¶ 3.] Southern's affidavit avers that the Program was displayed on at least one television at Leeg's Nightclub and provides details of the portion of the Program Southern watched. [Doc. 37-4.] Additionally, by his failure to respond to Plaintiff's Requests for Admissions, Ruegsegger has admitted that he unlawfully intercepted the Program and broadcast it at Leeg's Nightclub without Plaintiff's authorization. In his response in opposition to the motion for summary judgment, Ruegsegger provides nothing more than conclusory allegations that no fights were ever shown at Leeg's Nightclub. However, conclusory allegations or denials, without more, are insufficient to preclude granting a summary judgment motion. Ross, 759 F.2d at 365. Accordingly, Plaintiff has established that the Program was unlawfully intercepted and displayed at Leeg's Nightclub in violation of either § 553 or § 605. See J & J Sports Productions, Inc. v. Hernandez, No. 1:11CV749, 2013 WL 5937909, at *2 (M.D.N.C. Nov. 5, 2013) (recognizing that "[e]stablishing a violation of § 553 requires proof of the same elements as § 605"—(1) that the defendant did not obtain a license from the plaintiff to receive the signal for the program at the commercial establishment, (2) that the program was unlawfully received and exhibited at the commercial establishment, and (3) that the plaintiff is a person aggrieved); Delgado, 2012 WL 371630, at *3 (noting § 553 and § 605 are strict liability statutes).
An additional analysis must be undertaken, however, with respect to potential liability for Ruegsegger as an individual. To hold an individual liable for these unlawful actions, Plaintiff "must show that the corporate officer had a `right and ability to supervise the violations, and that [he] had a strong financial interest in such activities.'" J & J Sports Productions, Inc. v. J.R. `Z Neighborhood Sports Grille, Inc., C.A. No. 2:09-03141-DCN-RSC, 2010 WL 1838432, at * 2 (D.S.C. Apr. 5, 2010) (quoting J & J Sports Productions, Inc. v. Ribeiro, 562 F.Supp.2d 498, 501 (S.D.N.Y. 2008)) (alteration in J.R. `Z Neighborhood Sports Grille). Here, Ruegsegger admits he is the sole owner and operator of Upstate Recreation. [Doc. 5 ¶ 15.] As the sole owner and operator of Upstate Recreation, it follows that Ruegsegger had the right and ability to supervise the actions of Upstate Recreation and had a financial interest in broadcasting the Program. Additionally, by his failure to respond to Plaintiff's Requests for Admissions, Ruegsegger has admitted that he was present on September 24, 2011; that the employees at Leeg's Nightclub worked for and on behalf of Ruegsegger; and that the Program was broadcast for Ruegsegger's direct or indirect financial gain. [Doc. 60 at 5.] Finally, in his response in opposition to the motion for summary judgment, Ruegsegger does not challenge his supervisory abilities or financial interest in Upstate Recreation. [See Doc. 41.] Accordingly, the Court finds that Ruegsegger had the right and ability to supervise the broadcast of the Program and had a financial interest in the broadcast of the Program. As such, Plaintiff's motion for summary judgment should be granted on Plaintiff's § 605 claim against Ruegsegger.
The evidence of record establishes that Plaintiff owned the exclusive license to the Program and Ruegsegger unlawfully violated Plaintiff's rights by broadcasting the Program without paying the license fee. As such, Plaintiff's motion for summary judgment should be granted on Plaintiff's conversion claim against Ruegsegger.
In its memorandum in support of its motion for default judgment, Plaintiff seeks an award of $10,000 in statutory damages
Joe Hand Promotions, Inc. v. Todd, Civil Action No. 4:11-cv-3031-TLW-TER, 2012 WL 2178851, at *3 (D.S.C. Mar. 12, 2012), Report and Recommendation adopted by 2012 WL 2178822 (D.S.C. Jun. 13, 2012). The Fourth Circuit has not addressed any of these methods.
In line with awards recommended and/or awarded in this District for similar violations, the undersigned recommends a statutory damages award of $10,000. See Joe Hand Promotions, Inc. v. Rascals Café, LLC, C/A No. 4:11-2135-TWL-KDW, 2012 WL 4762142, at *5 (Aug. 31, 2012), Report and Recommendation adopted by 2012 WL 4762452 (D.S.C. Oct. 5, 2012) (awarding five times the license fee); Todd, 2012 WL 2178851 (awarding approximately five times the license fee). Here, the maximum statutory award is less than five times the license fee Defendants should have paid to legally broadcast the Program.
In its memorandum in support of its motion for default judgment, Plaintiff further seeks an award of $100,000 in enhanced damages
Here, in addition to the admissions based on Upstate Recreation's default and Ruegsegger's failure to respond to Plaintiff's Requests for Admissions, Plaintiff's President avers that the Program could not have been "mistakenly, innocently, or accidentally intercepted." [Doc. 37-6 ¶ 9.] Further, Southern paid a cover charge of $25 to enter Leeg's Nightclub. [Doc. 37-4 at 1.] Although the Court finds that Defendants' violations were willful and that more than nominal damages should be awarded to deter future violations, the Court does not conclude that the maximum enhancement is appropriate in this case. As such, the undersigned recommends an enhanced damages award of $25,000, or twoand-one-half times the statutory award, in line with awards recommended and/or awarded in this District for similar violations. See Rascals Café, LLC, 2012 WL 4762142, at *5 (awarding three times the statutory award); Todd, 2012 WL 2178851 (awarding two times the statutory award).
The Communications Act requires that a court award "full costs, including reasonable attorneys' fees to an aggrieved party who prevails." 47 U.S.C. § 605(e)(3)(B)(iii). As the rightful owner of the Program broadcast rights, Plaintiff is an aggrieved party that has prevailed. Accordingly, Plaintiff is entitled to costs and attorneys' fees in this case. In its memorandum in support of its motion for default judgment, Plaintiff seeks $3,207.50 in attorneys' fees and costs and has submitted affidavits of its South Carolina and California Counsel to support this request.
Plaintiff seeks recovery of the statutory filing fee, service of process fees, and investigative costs. The undersigned is not aware of cases in the Fourth Circuit or courts in this District that have discussed what "full costs" are to be awarded to a prevailing party pursuant to 47 U.S.C. § 605(e). In Kingvision Pay-Per-View, Ltd. v. Autar, 426 F.Supp.2d 59 (E.D.N.Y. 2006), the court considered the legislative history and determined that "full costs" included more than those costs taxable under 28 U.S.C. § 1920, the general statute setting out limited taxable costs. See id. at 65-67.
Based on the statute's mandatory award of "full costs," the undersigned finds it appropriate to award the type of costs requested, so long as these costs are adequately explained and supported. Accordingly, an award of the $400 statutory filing fee is appropriate in this matter. Additionally, Plaintiff's South Carolina counsel sets forth the cost of service of the Summons and Complaint as totaling $250 and has attached the invoices for the same. [Doc. 40-7 ¶ 5; Doc. 40-9.] Thus, Plaintiff has provided sufficient documentation and explanation of these costs, and the undersigned recommends they be awarded.
However, based on this record, the undersigned cannot recommend an award of $450 in investigative costs. The Autar court specifically found investigative costs could be recovered under 47 U.S.C. § 605(e). 426 F.Supp.2d at 67 (noting Senate Committee's intent that full costs include "reasonable investigative fees (related to the action brought) of an aggrieved party") (internal quotation and citation omitted). However, that court also found it was not required to award such fees and that an award requires the prevailing party to appropriately show that the fees sought were reasonable, i.e., the investigator's billing rate, time, and qualifications. Id. Because the plaintiff failed to document the investigator fees, the Autar court denied the same. Id. at 67-68. In this case, Plaintiff has provided no detail regarding the $450 in investigative fees sought. The undersigned concurs with the Autar court that fees for necessary investigative services may be awarded, but that the fees must be supported with specific information about the time the investigator spent on the matter, his hourly rate, and his qualifications to charge such fees. Without this supporting information, the undersigned recommends this portion of Plaintiff's request for costs be denied.
In sum, the undersigned recommends $650 be awarded in costs as follows: $400 for the filing fee and $250 for service of process.
When determining what constitutes a reasonable number of hours and the appropriate hourly rates, i.e., in calculating the lodestar fee, a court must consider the following factors: (1) the time and labor expended; (2) the novelty and difficulty of the questions raised; (3) the skill required to properly perform the legal services rendered; (4) the attorney's opportunity costs in pressing the instant litigation; (5) the customary fee for like work; (6) the attorney's expectations at the outset of the litigation; (7) the time limitations imposed by the client or circumstances; (8) the amount in controversy and the results obtained; (9) the experience, reputation, and ability of the attorney; (10) the undesirability of the case within the legal community in which the suit arose; (11) the nature and length of the professional relationship between attorney and client; and (12) attorneys' fees awards in similar cases. Barber v. Kimbrell's, Inc., 577 F.2d 216, 226 (4th Cir. 1978); Jackson v. Estelle's Place, LLC, 319 F. App'x 239, 243 (4th Cir. 2010). Although a court must consider all twelve of the factors, the court is not required to rigidly apply these factors, as not all may affect the fee in a given case. "[T]hese factors should be considered in determining the reasonable rate and the reasonable hours, which are then multiplied to determine the lodestar figure which will normally reflect a reasonable fee." E.E.O.C. v. Serv. News Co., 898 F.2d 958, 965 (4th Cir. 1990). In determining whether a rate is reasonable, the court is to consider "prevailing market rates in the relevant community." Rum Creek Coal Sales, Inc. v. Caperton, 31 F.3d 169, 175 (4th Cir. 1994) (quoting Blum v. Stenson, 465 U.S. 886, 895 (1984)). Further, this Court's Local Civil Rule 54.02(A) provides that attorneys' fee petitions must comply with Barber "and shall state any exceptional circumstances and the ability of the party to pay the fee."
The information Plaintiff provided, coupled with the Court's knowledge of rates in work of this type in this District, supports the $2,107.50 in fees submitted on Plaintiff's behalf. Based on the information and supporting documents before the Court at this time, the undersigned recommends a total award of costs and attorneys' fees in the amount of $2,757.50-$650 costs plus $2,107.50 attorneys' fees.
Generally, "the damages for conversion of personal property amount to the value of the property with interest." Joe Hand Promotions, Inc. v. Pee Dee Benevolent Soc'y, Inc., Civil Action No. 4:11-cv-2022-TLW-TER, 2012 WL 2178706, at *6 (S.C.D. Mar. 12, 2012). In similar scenarios, courts have interpreted this value to encompass the amount that a defendant would have had to pay for a commercial sublicense to legally air the program. See Todd, 2012 WL 2178851, at *3 (finding the appropriate damages on the plaintiff's conversion claim to be $1,100, calculated by the licensing fee the defendants would have had to pay for an establishment with a 75-person capacity). Here, the applicable licensing fee for Defendants' establishment, which has a 300-person capacity, would have been $2,250.
Wherefore, based upon the foregoing, the Court recommends that Plaintiff's motion for summary judgment against Ruegsegger be GRANTED, Plaintiff's motion for default judgment against Upstate Recreation be GRANTED, and Ruegsegger's motion to dismiss be DENIED. It is further recommended that Plaintiff be awarded either (1) statutory damages in the amount of $10,000, enhanced damages in the amount of $25,000, and attorneys' fees and costs in the amount of $2,757.50, for a total award of $37,757.50 on its claim under 47 U.S.C. § 605 or (2) actual damages in the amount of $2,250 on its conversion claim. Within fourteen days of the date of this Report and Recommendation, Plaintiff shall elect between recovery on the statutory claim or the conversion claim. It is further recommended that Defendants be jointly and severally liable for the damage award elected by Plaintiff.
IT IS SO RECOMMENDED.
The parties are advised that they may file specific written objections to this Report and Recommendation with the District Judge. Objections must specifically identify the portions of the Report and Recommendation to which objections are made and the basis for such objections. "[I]n the absence of a timely filed objection, a district court need not conduct a de novo review, but instead must `only satisfy itself that there is no clear error on the face of the record in order to accept the recommendation.'" Diamond v. Colonial Life & Acc. Ins. Co., 416 F.3d 310 (4th Cir. 2005) (quoting Fed. R. Civ. P. 72 advisory committee's note).
Specific written objections must be filed within fourteen (14) days of the date of service of this Report and Recommendation. 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b); see Fed. R. Civ. P. 6(a), (d). Filing by mail pursuant to Federal Rule of Civil Procedure 5 may be accomplished by mailing objections to:
Here, it appears Plaintiff will elect to recover on the statutory claim because, in its memorandum in support of its motion for default judgment, Plaintiff states that it will withdraw its other causes of action if a judgment were granted under § 605. [Doc. 40-1 at 3 n.1.] Further, in its motion for summary judgment, Plaintiff "recognizes that the District of South Carolina has not permitted recovery of both conversion and statutory damages." [Doc. 37-1 at 13.] However, out of an abundance of caution, Plaintiff should be given fourteen days to elect between recovery on the statutory claims or the conversion claim.