Joint Stock Company "Channel One Russia Worldwide" v. Russian TV Company Inc. et al

Filing 368

OPINION & ORDER re: 347 MOTION to Stay Entry of Judgment. filed by SR Express Consulting d/b/a Techstudio, Servernaya Inc., Estidesign Inc., Steven Rudik, Russian TV Company Inc. For the foregoing reasons, Defendants' motion to stay entry of money judgment is DENIED. The Clerk of Court is respectfully directed to close the motion at Dkt. 347. Plaintiff is directed to file a proposed form of judgment consistent with this Order by January 19, 2024, with any object ions by Defendants to be filed by January 26, 2024. When either Plaintiff is no longer subject to sanctions under E.O. 14024 or any party has obtained a specific license from OFAC authorizing Plaintiff's receipt of funds, the parties shall inform the Court. (Signed by Judge Lorna G. Schofield on 1/12/2024) (mml)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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:
JOINT STOCK COMPANY “CHANNEL ONE :
RUSSIA WORLDWIDE,”
:
:
Plaintiff,
:
-against:
:
RUSSIAN TV COMPANY, et al.,
:
:
Defendants. :
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18 Civ. 2318 (LGS)
OPINION & ORDER

LORNA G. SCHOFIELD, District Judge:
Defendants Russian TV Company, Inc., SR Express Consulting Inc. d/b/a/ Techstudio,
Steven Rudik, Servernaya Inc. and ESTIDesign Inc. move to stay entry of money judgment in
this action until Plaintiff Joint Stock Company “Channel One Russia Worldwide” either is no
longer subject to sanctions under Executive Order 14024 (“E.O. 14024”) or has obtained a
license from the Office of Foreign Assets Control of the United States Department of the
Treasury (“OFAC”) authorizing payment of the judgment and attorneys’ fees. For the reasons
below, Defendants’ motion is denied.
I.

BACKGROUND
Plaintiff brought this action against Defendants alleging violations of the Federal

Communications Act (“FCA”). After discovery, the parties agreed to a summary trial of the
FCA claims, which Plaintiff agreed would resolve its remaining claims, including those under
the Copyright Act. On September 22, 2021, the Court issued Amended Findings of Fact and
Conclusions of Law, determining that Defendants had violated FCA § 605(a) by illegally
rebroadcasting Plaintiff’s television programming. On April 20, 2023, the Court entered a
permanent injunction enjoining Defendants from broadcasting or otherwise distributing the

programming broadcast by Plaintiff without Plaintiff’s prior authorization. The same day, the
Court adopted in full a Report and Recommendation by Magistrate Judge Barbara C. Moses,
which recommended awarding Plaintiff a total of $1,149,000 in statutory damages, in addition to
attorneys’ fees and costs in an amount to be determined after further proceedings.
On April 15, 2021, President Biden issued E.O. 14024, declaring a national emergency to
deal with the threat caused by the “harmful foreign activities of the Government of the Russian
Federation.” Exec. Order No. 14024, 86 Fed. Reg. 20,249 (Apr. 15, 2021). Under E.O. 14024,
all U.S.-based “property and interests in property” of certain designated categories of Russian
persons “are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt
in.” Id. § 1. The executive order prohibits “the making of any contribution or provision of
funds, goods, or services by, to, or for the benefit of any person whose property and interests in
property are blocked pursuant to this order.” Id. § 2(a).
On March 1, 2022, OFAC promulgated a final rule under which “[a]ll transactions
prohibited pursuant to Executive Order (E.O.) 14024 of April 15, 2021 are prohibited.” 31
C.F.R. § 587.201(a). The final rule prohibits “the enforcement of any lien, judgment, arbitral
award, decree, or other order through execution, garnishment, or other judicial process
purporting to transfer or otherwise alter or affect property or interests in property blocked
pursuant to § 587.201.” Id. § 587.506(d). “Unless licensed pursuant to this part, any attachment,
judgment, decree, lien, execution, garnishment, or other judicial process is null and void with
respect to any property or interest in property blocked pursuant to § 587.201.” Id. § 587.202(f).
On May 8, 2022, OFAC added Plaintiff to its Specially Designated Nationals and
Blocked Persons List. See Press Release, Office of Foreign Assets Control, U.S. Dep’t of

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Treasury, U.S. Treasury Takes Sweeping Action Against Russia’s War Effort (May 8, 2022),
https://home.treasury.gov/news/press-releases/jy0771 [https://perma.cc/HTX8-JR97].
On May 4, 2023, Defendants moved to stay entry of judgment. On December 5 and 6,
2023, the parties filed additional letters in response to the Court’s order to “explain[] any legal
bases for why the Court should not enter judgment and stay execution of such judgment until
Plaintiff either is no longer subject to sanctions under Executive Order 14024 or is granted a
license by the Office of Foreign Assets Control, to minimize delay in the start of any appellate
process.”
II.

STANDARD
“The power to stay proceedings is incidental to the power inherent in every court to

control the disposition of the causes on its docket with economy of time and effort for itself, for
counsel, and for litigants.” Louis Vuitton Malletier S.A. v. LY USA, Inc., 676 F.3d 83, 96 (2d Cir.
2012).1 “The person seeking a stay bears the burden of establishing its need.” Id. at 97. “The
decision whether to stay an action calls on a district court’s studied judgment, requiring the court
to examine the particular facts before it and determine the extent to which . . . a stay would work
a hardship, inequity, or injustice to a party, the public or the court.” Range v. 480-486
Broadway, LLC, 810 F.3d 108, 113 (2d Cir. 2015). “When considering whether to stay a case
pending the resolution of related proceedings, courts in this District generally consider five
factors: (1) the private interests of the plaintiffs in proceeding expeditiously with the civil
litigation as balanced against the prejudice to the plaintiffs if delayed; (2) the private interests of
and burden on the defendants; (3) the interests of the courts; (4) the interests of persons not

Unless otherwise indicated, in quoting cases, all internal quotation marks, alterations,
emphases, footnotes and citations are omitted.

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parties to the civil litigation; and (5) the public interest.” Hamilton Rsrv. Bank Ltd. v.
Democratic Socialist Republic of Sri Lanka, No. 22 Civ. 5199, 2023 WL 7180683, at *4
(S.D.N.Y. Nov. 1, 2023).
III.

DISCUSSION
Defendants’ motion to stay entry of money judgment is denied because the alternative of

entering judgment and staying its execution is the preferable course weighing all of the relevant
interests.
First, entering money judgment supports Plaintiff’s interest “in proceeding expeditiously
with the civil litigation,” see id. at *4, as entry would start the appellate clock. As to the second
factor, Defendants argue that entering money judgment would cause them significant prejudice
because a large unpaid judgment “would reflect negatively on Defendants in the eyes of existing
and prospective stakeholders, lenders, creditors, and business partners, and require Defendants to
expend resources determining how to properly account for it in Defendants’ records and filings.”
This argument is unavailing. Defendants have not explained how they would suffer any unfair
prejudice. Defendants have a liability subject to two contingencies, appellate review and the
sanctions order. Permitting appellate review would remove at least one contingency and any
unwarranted cloud on Defendants’ reputation or financial reports. In the meantime, during the
appellate process, the sanctions order might be lifted pursuant to a license application or for
some other reason. As long as the finding of Defendants’ liability is undisturbed, Defendants
have a contingent liability that may reflect on them negatively, regardless of whether formal
judgment is entered. That Defendants will have to expend resources to determine the proper
accounting now and in the future seems inevitable, unless the liability is extinguished via
appellate review. In short, any prejudice to Defendants is outweighed by both Plaintiff’s and

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Defendants’ interest in beginning the appellate process and expeditiously obtaining a final
determination of Defendants’ liability.
The interests of the courts, nonparties and public are neutral. Whether entry of judgment
is stayed, or judgment is entered and execution is stayed, these interests are served by deferring
to the U.S. foreign policy set by the Executive Branch as reflected in the OFAC sanctions
regime. See City of New York v. Chevron Corp., 993 F.3d 81, 102 (2d Cir. 2021) (“[J]udicial
caution . . . guards against federal courts triggering . . . serious foreign policy consequences, and
instead defers such decisions, quite appropriately, to the political branches.”).
Plaintiff’s award of attorneys’ fees and costs will be determined after further proceedings
before Judge Moses. Under the sanctions regime, certain legal services may be provided to
sanctioned entities, but “any receipt of payment of professional fees and reimbursement of
incurred expenses must be authorized pursuant to § 587.507, which authorizes certain payments
for legal services from funds originating outside the United States.” 31 C.F.R. § 587.506(a)
(emphasis added). If Defendants are U.S.-based, as they appear to be, their payment of any
attorneys’ fees and costs would be stayed, like the payment of money damages.
IV.

CONCLUSION
For the foregoing reasons, Defendants’ motion to stay entry of money judgment is

DENIED. The Clerk of Court is respectfully directed to close the motion at Dkt. 347. Plaintiff
is directed to file a proposed form of judgment consistent with this Order by January 19, 2024,
with any objections by Defendants to be filed by January 26, 2024. When either Plaintiff is no
longer subject to sanctions under E.O. 14024 or any party has obtained a specific license from
OFAC authorizing Plaintiff’s receipt of funds, the parties shall inform the Court.
Dated: January 12, 2024
New York, New York
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