J & J Sports Productions, Inc. v. Freeman

Filing 15

MEMORANDUM DECISION AND ORDER. Plaintiff's 12 MOTION for Default Judgment is granted. The Clerk is directed to enter judgment in favor of plaintiff and against defendants, jointly and severally, in the amount of $40,000 plus $520, for a total of $40,520, with interest from June 9, 2012. Ordered by Judge Brian M. Cogan on 8/13/2014. (Barrett, C)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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J & J SPORTS PRODUCTIONS, INC.,
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Plaintiff,
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- against :
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EDDIE T. FREEMAN, d/b/a Sugarland and
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Eddie T. Freeman,
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Defendant.
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MEMORANDUM
DECISION AND ORDER
14 Civ. 3476 (BMC)

COGAN, District Judge.
This case is before the Court on plaintiff’s motion for a default judgment as a
result of defendants’ failure to answer or appear. “Once default has been entered, the
allegations of the Complaint that establish the defendant’s liability are accepted as true,
except for those relating to the amount of damages.” J & J Sports Prods., Inc. v. Bimber,
No. 07-CV-590S, 2008 WL 2074083, at *1 (W.D.N.Y. May 14, 2008) (citation omitted).
Plaintiff owns certain distribution rights for a closed-circuit television event
known as the “Manny Pacquiao v. Timothy Bradley Boxing Event” (the “Event”). On
November 14, 2009, defendant Eddie T. Freeman, individually and d/b/a Sugarland (the
“Lounge”) stole the signal and exhibited the Event in its commercial establishment for
the benefit of itself and its patrons.
The Event was distributed by way of satellite uplink and then retransmitted to
cable and satellite distributors. Theft of a signal transmitted in this manner violates the
Communications Act of 1934, 47 U.S.C. § 605 (1996). See Int’l Cablevision, Inc. v.

Sykes, 75 F.3d 123 (2d Cir. 1996). Because plaintiff distributed the Event by closed
circuit cable television, defendants’ theft of the signal also violates §553(a)(1). The
Second Circuit has held that when both statutes apply, a plaintiff is entitled to proceed
under §605, which has more severe damage provisions. See Int’l Cablevision v. Sykes,
997 F.2d 998 (2d Cir. 1993).
Section 605(e)(3)(C)(i) allows plaintiff the choice of recovering either (I) its
actual damages plus the defendant’s net profits; or (II) statutory damages. Here,
plaintiff’s primary request is for statutory damages. The statutory damages consist of an
amount awarded in the Court’s discretion (i.e., “as the Court considers just”), between
$1,000 and $10,000 per violation. In addition to these statutory damages, the Court may
award enhanced or exemplary damages of up to $100,000 if the signal was pirated for
commercial use. 47 U.S.C. §605(e)(3)(C)(ii). There is no question that the signal at
issue here was pirated for commercial purposes; plaintiff’s investigator paid a $30.00
cover charge and observed it being shown on television in the Lounge to an audience of
at least 107 spectators.
Courts have utilized different approaches to determine where to fix statutory
damages within the range of $1,000-$10,000. A number of courts undertake a
disgorgement analysis, where they multiply the number of patrons present at the
unauthorized event by a presumed ticket price. See, e.g., Time Warner Cable v. Taco
Rapido Rest., 988 F. Supp. 107 (E.D.N.Y. 1997); Cablevision Sys. Corp. v. 45 Midland
Enters., 858 F. Supp. 42, 45 (S.D.N.Y. 1994). Some courts increase this calculation by
presuming the maximum capacity, even if the investigator’s report showed that that
capacity was not met. See Garden City Boxing Club, Inc. v. Bello, No. CV-05-1300, WL

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2496062, at *1 (E.D.N.Y. Sept. 20, 2005). Other courts have relied on less tangible
considerations, such as how many monitors the defendant used to show the event,
whether he collected a cover charge, and whether he advertised the purloined event to
attract more business. Some of these courts have also applied a multiplier to some
variation of a disgorgement formula. See, e.g., Kingvision Pay-Per-View, Ltd. v. Scott
E’s Pub, Inc., 146 F. Supp. 2d 955 (E.D. Wis. 2001); Home Box Office v. Champs of
New Haven, Inc., 837 F. Supp. 480 (D. Conn. 1993).
The mathematical approach or the consideration of aggravating factors makes
sense in a contested matter, where both sides have appeared and all of the facts have been
placed before the Court. However, when a defendant has failed to answer legal process
and defaulted in a case, the application of such factors may unfairly penalize the plaintiff.
Here, for example, it may be the case that defendants locally advertised the stolen event
by word of mouth, sandwich board, or pennysaver, if not other means – it seems unlikely
that the Event suddenly popped up on the Lounge’s screen without notice to past or
potential patrons – but we do not know. It may be that defendants are regular thieves of
satellite signals and this is just the latest, but not the last, instance, but defendants’ default
again deprives us of that knowledge. It may even be the case that defendants taped the
Event and showed it during a discounted Happy Hour the following night; again, we
simply do not know. And while it is reasonable to require a plaintiff to undertake some
investigation before bringing this kind of action, as plaintiff here has done, we have to
recognize that with statutory damages of $10,000 per violation and defendants who are
often insolvent, there is only so much digging that a court can expect a plaintiff to
perform.

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Thus handicapped by defendants’ decision to not only violate the law, but to
ignore the process of this Court, this Court believes that the $10,000 statutory maximum
should be the presumptive amount awarded in a single violation case absent any
indication in the record of mitigating circumstances. To hold otherwise would encourage
defendants caught red-handed to ignore legal process in the recognition that judicial
discretion is the only defense they have. This Court will not give them that defense at the
risk of punishing an innocent plaintiff.
The Court is similarly handicapped in determining the amount of enhanced
damages to award. If defendants had appeared, we would examine their financial
statements and other financial information, the frequency of their violations, and the
extent to which their business depends on this illegal conduct, and then award the
minimum amount deemed necessary to ensure that these violations do not recur. In the
absence of evidence concerning defendants’ finances and conduct, however, the
enhanced damages must remain somewhat speculative. The Court is mindful that the
speculative nature of the enhanced damages is defendants’ fault, and they should not
benefit from it. At the same time, it is clear that with a statutory maximum of $100,000,
an aggressive award of enhanced damages may drive a small business to close, and that is
not the intent of the statute, unless it is a case in which recurrent theft makes the
difference between the business being viable or non-viable.
Under these circumstances, the Court holds that enhanced damages of $30,000 are
appropriate. The only information about defendants in the record is that the Lounge is in
a location in Brooklyn and that it holds upwards of 110 patrons.

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In total, forty thousand dollars (statutory plus enhanced damages) should be
painful to defendants, but not so painful as to cause undue hardship. If this analysis is
incorrect, the defendants may finally choose to emerge into the light of our legal system,
as there are procedures for addressing undue hardship, whether in this Court or others.
Finally, the statute provides for a plaintiff’s recovery of costs and attorneys’ fees,
as well as interest. Plaintiff is not seeking attorneys’ fees, and its claimed costs of $520
are reasonable. It is entitled to interest, but the Court rejects its request for interest at the
state statutory rate of 9%, a number apparently derived from the New York Civil Practice
Law and Rules. This is a federal question case and prejudgment interest should accrue at
the same rate as post-judgment interest.
Plaintiff’s motion is therefore granted. The Clerk is directed to enter judgment in
favor of plaintiff and against defendants, jointly and severally, in the amount of $40,000
plus $520, for a total of $40,520, with interest from June 9, 2012.
SO ORDERED.

Digitally signed by Brian M.
Cogan
U.S.D.J.
Dated: Brooklyn, New York
August 13, 2014

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