United States District Court, D. New Jersey
May 2, 2005.
Barry Averbach et al.
The opinion of the court was delivered by: GARRETT BROWN, District Judge
This matter comes before the Court upon plaintiff DIRECTV's
("Plaintiff" or "DIRECTV") motion for final judgment by default
against defendant Barry Averbach ("Defendant"). Defendant was
served with the summons and complaint, but failed to answer or
otherwise respond to the complaint. On DIRECTV'S motion, the
Clerk of the Court entered default against Defendant for failure
to appear in the action. DIRECTV then filed the instant motion
for final judgment by default. The Court, having considered
Plaintiff's submission and decided the matter without oral
argument pursuant to Fed.R.Civ.P. 78, finds as follows:
DIRECTV alleges that Defendant violated the Federal
Communications Act of 1934 ("Communications Act"), as amended,
47 U.S.C. § 605, and the Electronic Communications Privacy Act
("Privacy Act"), 18 U.S.C. §§ 2510-2521, by illegally purchasing,
using and/or selling devices that intercept DIRECTV's
programming. Plaintiff requests injunctive relief under both
statutes. However, Plaintiff only seeks damages under Section
2520 of the Privacy Act, foregoing the damages available under
Section 605 of the Communications Act. Under Section 2520(c)(2), if the Court finds that damages are
appropriate, it may award the greater of actual or statutory
damages. Statutory damages "is the greater of $100 a day for each
day of violation or $10,000." 18 U.S.C. § 2520(c)(2) (2005). In
contrast, under Section 605, if the Court chooses to assess
damages, it must impose an award not less than $1,000 and no more
than $10,000. The Court has broad discretion to fix damages
within that range. See generally DIRECTV, Inc. v. Cain,
2005 U.S. Dist. LEXIS 7404, *2 (D.N.J. April 20, 2005) (citations
omitted). In the present case, Defendant allegedly bought and
then resold approximately forty-one illegal devices. DIRECTV
seeks $310,718.97 in actual damages or, in the alternative,
$410,000 in statutory damages under Section 2520.
The Court notes that these motions are nothing new in this
District. DIRECTV has been plagued by the proliferation of
companies engaged in the sale of illegal equipment that
unscrambles their signal and allows users to view their
programming for free. With the assistance of law enforcement
authorities, DIRECTV has engaged in an aggressive campaign
designed to identify the manufacturers and distributors of pirate
access devices and the individuals purchasing them and recover
lost revenue via legal actions. In DIRECTV v. DeCroce,
332 F. Supp. 2d 715 (D.N.J. 2004), the Honorable Katharine S. Hayden,
U.S.D.J., observed that "these lawsuits are often either quickly
settled for unspecified sums or [as is the case here] . . .
presented in the context of a default judgment application . . .
that does not subject DIRECTV's claims to the rigors of the
adversary system." DeCroce, 332 F. Supp. 2d at 717.
The Court emphasizes that these motions must be considered on a
case-by-case basis. Often, DIRECTV has sought substantial
statutory damages against defendants who had purchased a pirate
access device solely for home viewing. Recently, in DIRECTV v.
Cain, the Honorable William J. Martini, U.S.D.J., expressed concern that,
in certain circumstances, available statutory damages may
"unjustifiably exceed the goals of compensation and punishment
and provide plaintiff with a windfall." Cain, 2005 U.S. Dist.
LEXIS 7404 at *4-5 (citing DIRECTV, Inc. v. Brown,
371 F.3d 814, 819 (11th Cir. 2004) (concluding that the district court
did not abuse its discretion when denying damages under § 2520
and characterizing a liquidated damages award under § 2520(c)(2)
as potentially being "gratuitous"). Here, Defendant's conduct is
far more culpable than that considered in Cain. Nonetheless,
this Court declines to authorize DIRECTV's substantial damages
request without examining the severity of the defendant's conduct
in light of the dual goals of damages compensation and
As a threshold matter, the Court finds that DIRECTV's actual
damages calculations are extremely speculative; even DIRECTV
acknowledges that "[w]ithout the Defendant's appearance,
DIRECTV's actual damages are difficult to quantify." Averbach Br.
at 25. In order to calculate actual damages, DIRECTV relies on
the following calculations and assumptions: (1) the average
monthly bill sent to the top 10 percent of DIRECTV's customers
for the relevant period was $204.56, (2) it is assumed that an
unauthorized user would view as much programming as a typical
high-end (top 10%) customer, (3) it is assumed that an
unauthorized user is comparable to a typical paying high-end
customer in terms of consumption because "[t]hose who invest
hundreds or thousands of dollars in illegal devices and software
can be expected to view a significant amount of television
programming," and (4) anecdotal information suggests that
unauthorized users are heavy consumers of sports subscriptions,
pay-per-view movies and events (such as boxing matches) and adult
programming. DIRECTV's assumptions and anecdotal information seem
entirely too speculative to support the large damages award
requested, especially without the benefit of the adversary system to aid in valuation.
Putting that issue aside, the Court focuses on the statutory
damages available under Section 2520 of the Privacy Act and
Section 605 of the Communications Act. More specifically, the
Court focuses on DIRECTV's decision to pursue damages under
Section 2520 and not Section 605.
DIRECTV submits that it is entitled to $410,000 in statutory
damages under Section 2520, representing $10,000 per pirate
access device. See Averbach Br. at 24, n. 14 (citing Community
Television Syst., Inc. v. Caruso, 284 F.3d 430, 435-36 (2d Cir.
2002)). However, several courts have expressly held that parties
may not recover for multiple violations of the Privacy Act or
different types of violations of the Privacy Act. See e.g.
Desilets v. Wal-Mart Stores, Inc., 171 F.3d 711, 714 (1st
Cir. 1999) ("Neither the number of discrete violations of the Act
committed by the `person or entity engaged in that violation' on
any one day, nor . . . the different types of violations
committed on any one day . . . are relevant in calculating the
liquidated damages to be awarded" because "the statute makes no
apparent distinction among the types of separate injuries at
issue . . . for purposes of assessing liquidated damages.")
(clarifying Dorris v. Absher, 179 F.3d 420, 428 (6th Cir.
1999) (leaving open the issue of whether $10,000 per violation
may be appropriate when the violations are "widely separated by
time, place or people"). In Smoot v. United Transportation
Union, 246 F.3d 633, 648 (6th Cir. 2001), a Sixth Circuit
panel stressed that § 2520(c)(2)(B) "describes only one inclusive
method for calculating damages," otherwise the "$100 a day"
provision would be rendered superfluous. Smoot,
246 F.3d at 648.
DIRECTV relies on Community Television Sys., Inc. v. Caruso,
284 F.3d 430, 435-36 (2d Cir. 2002), to support its position.
See Plaintiff's Brief at n. 14. However, in Caruso, the court
found that a minimum statutory award of $10,000 was appropriate
"each time a device is purchased and installed" under Section 605, not Section 2520. Caruso,
284 F.3d at 435-36. In contrast to Section 2520, Section
605(c)(C)(II) expressly provides that "the party aggrieved may
recover an award of statutory damages for each violation of
subsec. (a) involved in the action in a sum of not less than
$1,000 or more than $10,000, as the court considers just."
47 U.S.C. § 605(e)(C)(II) (2005). Therefore, this Court concludes
that Plaintiff may not recover statutory damages for each
violation under Section 2520. However, statutory damages are
available for each violation under Section 605.
This calls into question DIRECTV's decision to pursue damages
under Section 2520 and not Section 605. The Honorable William J.
Martini recently addressed another situation where DIRECTV opted
not to pursue damages under Section 605. See Cain, 2005 U.S.
Dist. LEXIS 7404 at 3-7. In Cain, the defendant purchased a
pirate access device for viewing DIRECTV's programming in his
home. DIRECTV sought $10,000 in statutory damages plus attorneys'
fees and costs under Section 2520 and did not request damages
under Section 605. At oral argument, the court "pressed . . . why
DIRECTV [sought] monetary damages under § 2520 instead of § 605
. . ." Id. at 3-4. "[P]laintiff responded by arguing that the
Court should impose a sanction of $10,000, rather than a
potentially lesser sanction under § 605, for both compensatory
and punitive reasons." Id. at 4. In its letter opinion, the
court opined that under those facts a $10,000 damage award would
represent a windfall to the Plaintiff. The court emphasized the
importance of assessing the defendant's true culpability when
crafting an appropriate damages award. Therefore, the court
denied DIRECTV's request for damages under Section 2520. However,
the court noted that an award between $1,000 and $10,000 under
Section 605 would be more fitting. Thus, the court stated that it
would "consider granting a damages award [under Section 605] upon
plaintiff's timely submission of an appropriate motion for such relief."
This Court finds Cain instructive. The Court acknowledges
that the Defendant's conduct is far more severe and pervasive
than in Cain. Rather than viewing DIRECTV's programming in his
home, Defendant was allegedly engaged in an illegal commercial
enterprise and bought and resold approximately forty-one (41)
devices. Under the instant facts, an award of $10,000 under
Section 2520 clearly would not be excessive. Instead, it seems
that such an award would inadequately account for the true
culpability of Defendant's conduct and fail to accomplish the
complimentary goals of compensation and punishment. Like in
Cain, DIRECTV does not seek damages under Section 605. Also,
DIRECTV does not offer a per day calculation under Section 2520.
Therefore, because this Court has determined that Section 2520
does not permit recovery of statutory damages for each violation,
DIRECTV only can recover a maximum of $10,000. However, this
Court would consider an appropriate motion under Section 605.
Accordingly, the Court will deny Plaintiff's motion for damages
under Section 2520 without prejudice and will grant Plaintiff ten
(10) days leave to file a new motion for damages under both
Section 2520 and Section 605.
The Court will grant Plaintiff's request to permanently enjoin
Defendant from committing or assisting in the commission of any
violation of Section 605 and Sections 2511 and 2512. The Court
will also consider Plaintiff's request for attorneys' fees and
costs upon timely submission of an appropriate affidavit of
services and bill of costs that comport with Local Civil Rules
54.1 and 54.2.
An appropriate Order accompanies this Letter Opinion.
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