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June 30, 2000


The opinion of the court was delivered by: Henderson, District Judge



On September 3, 1999, Kingvision Pay-Per-View ("Plaintiff") filed suit against Defendant Fred M. Marker ("Defendant"), individually and d/b/a Blue Bird Cocktails for the unlawful interception and broadcast of the Mike Tyson v. Bruce Seldon Championship Boxing Program ("the Program") on September 7, 1996, for which Plaintiff had distribution rights. On October 26, 1999, Plaintiff filed its first amended complaint against the Defendant. Plaintiff alleges that Defendant violated 47 U.S.C. § 605, 47 U.S.C. § 553, 17 U.S.C. § 501, and California Business and Professions Code § 17040 and § 17200. Plaintiff also alleges that Defendant is liable for conversion and breach of implied contract. Plaintiff seeks statutory damages under 47 U.S.C. § 605 and § 553, and compensatory damages for all other claims. Plaintiff also seeks attorney's fees and costs as allowed under 47 U.S.C. § 605 and § 553.

Defendant was properly served with the amended complaint on December 8, 1999 and failed to respond within the time prescribed by the Federal Rules of Civil Procedure. Consequently, pursuant to F.R.C.P. 55(a), default was entered against Defendant on January 25, 2000. Plaintiff filed an application for default judgement on March 23, 2000 with supporting declarations.


For a default judgement, well-pleaded factual allegations are sufficient to establish a defendant's liability. However, the allegations of the complaint regarding the amount of damages suffered are not controlling. See Dundee Cement Co. v. Howard Pipe & Concrete Products, 722 F.2d 1319, 1323-1324 (7th Cir. 1983); Geddes v. United Financial Group, 559 F.2d 557, 560 (9th Cir. 1977). Therefore, while Plaintiff asks for damages in the amount of $120,000 against the Defendant, such a request is not dispositive.


A. Statutory Damages

Based on the pleadings, Defendant is liable for conduct that violates both 47 U.S.C. § 605 and § 553. Plaintiff requests separate awards for each statutory provision violated, even though the multiple violations stem from the same conduct. While a few courts have multiplied awards when liability exists under both provisions, the majority of courts — including most courts in the Ninth Circuit — have imposed damages "pursuant to § 605 alone rather than cumulatively." See Kingvision Pay-Per-View v. Arias, 2000 WL 20973, at *2 n. 7 (N.D.Cal. Jan.7, 2000) (citing Joe Hand Promotions, Inc. v. Pete, 1999 WL 638215, at *1 (N.D.Cal. Aug.17, 1999)). See also International Cablevision, Inc. v. Sykes, 75 F.3d 123, 129 (2d Cir. 1996) (concluding that damages should be imposed under § 605 instead of the lesser damages available under § 553). But see Spencer Promotions, Inc. v. 5th Quarter Enterprises, 1996 WL 438789, at *7 (N.D.Cal. Feb.21, 1996) (awarding statutory damages under both § 605 and § 553). In fact this very court has previously declined to award additional damages under § 553 when a defendant has violated both § 605 and § 553. See Joe Hand Promotions, Inc. v. De Miguel, No. C99-02171, at *3 n. 2 (N.D.Cal. Feb. 9, 2000). Since there are no unusual or particularly egregious circumstances that would justify a departure from these precedents, the Court will award damages only under 47 U.S.C. § 605.*fn1

For each violation of section 605, Plaintiff is entitled to damages of $1,000 to $10,000, the exact amount to be determined by what the Court "considers just." See 47 U.S.C. § 605(e)(3)(C)(i)(II). In addition, the Court has discretion to increase the award of damages for each violation in an amount up to $100,000 when a "violation was committed willfully and for purposes of direct or indirect commercial advantage or financial gain." See 47 U.S.C. § 605(e)(3)(C)(ii).

In asking for enhanced statutory damages, Plaintiff contends that its allegations — that the Program was willfully displayed for direct or indirect commercial advantage or private financial gain — should be deemed admitted under the rules governing default. See Danning v. Lavine, 572 F.2d 1386 (9th Cir. 1978). However, since Plaintiffs allegations of willfulness bear directly on the question of damages, the mere assertion that Defendant acted willfully is insufficient to justify enhanced damages. See Geddes v. United Financial Group, 559 F.2d at 560.

In this case, although the Program was broadcast in a commercial setting, there is no evidence of significant "commercial advantage or private financial gain." Plaintiff has not alleged that Defendant engaged in promotional advertising for the Program or charged a premium for food and drinks. There was no cover charge to enter the establishment.*fn2 And as there were only 16 patrons in Defendant's establishment at the time of the violation, any commercial advantage or private financial gain was minimal at best.

Moreover, any claims of future loss of business are purely speculative. Plaintiff makes a tenuous slippery slope claim that customers will migrate to establishments that offer pirated Pay-Per-View Programs at no cover charge, and that current establishments that pay for such Programs will be encouraged to cancel their subscriptions and engage in piracy just to compete. But there is no evidence that these 16 patrons had migrated from another establishment. Nor does Plaintiff allege that the 16 patrons were at Defendant's establishment solely to watch the pirated Program. Any fear that Defendant's conduct actually wooed customers away from establishments that paid for the Program seems unsubstantiated.

In the past, despite widespread knowledge about illegal cable reception, isolated violations do not seem to have led to the proliferating piracy and decreasing cable subscriptions portended by Plaintiff. Undoubtedly, the flood of cable piracy has been dammed by the diligent efforts of distributors such as Plaintiff to investigate and prosecute illegal activity. And courts should adequately compensate distributors' losses and punish any violators. But the principle of proportionality governs here: distributors should not be overcompensated and statutory awards should be proportional to the violation. For example, a higher statutory award may be justified in cases where defendants are repeat offenders who have pirated similar Programs on previous occasions, and who need an especially severe financial deterrent. See, e.g., Joe Hand Promotions, Inc. v. De Miguel, No. C99-02171, at *3 But there are no allegations of such repeat behavior, and no evidence of otherwise egregious willfulness that would warrant harsh punitive damages in this case. ...

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