Charter Communications Entertainment I v. Burdulis

• Decision Date: 22 March 2005
• Docket Number: Civil Action No. 04-40098-FDS.
• Citation: 367 F.Supp.2d 16
• Parties: CHARTER COMMUNICATIONS ENTERTAINMENT I, LLC d/b/a Charter Communications, Plaintiff, v. Thomas a/k/a Tom BURDULIS, Defendant.
• Court: U.S. District Court — District of Massachusetts

367 F.Supp.2d 16

CHARTER COMMUNICATIONS ENTERTAINMENT I, LLC d/b/a Charter Communications, Plaintiff, v. Thomas a/k/a Tom BURDULIS, Defendant.

Civil Action No. 04-40098-FDS.

United States District Court, D. Massachusetts.

March 22, 2005.

COPYRIGHT MATERIAL OMITTED

Burton B. Cohen, Christopher L. Brown, Robert J. Munnelly, Jr., Murtha Cullina Roche Carens & DeGiacomo, LLP, Boston, MA, for Plaintiff.

Thomas Burdulis, Worcester, MA, pro se.

AMENDED MEMORANDUM AND ORDER ON PLAINTIFF'S MOTION FOR DEFAULT JUDGMENT¹

SAYLOR, District Judge.

This case involves allegations of cable television piracy. The cable operator, Charter Communications, has filed a civil action against Thomas Burdulis, who is alleged to have purchased an unauthorized device to defeat scrambling or security measures and thereby obtain premium cable television services for free. Charter has obtained an entry of default and has moved for a default judgment.

The issue in this case is not the propriety of entering a judgment of default, but rather ascertaining the amount of damages to be assessed against the defaulting defendant. There are multiple levels of analysis that must be undertaken to accomplish that seemingly simple task. First, the Court must determine whether Charter is entitled to recover under not only 47 U.S.C. § 553, which applies to the theft of "cable" transmissions, but also 47 U.S.C. § 605, which applies to the theft of "radio" transmissions. The issue is not merely academic, as the latter statute provides for greater potential recovery of damages and recovery of costs and attorneys' fees as of right. The Court must then consider the amount of compensatory damages (either statutory or actual) to be awarded and the extent to which enhanced damages, attorneys' fees, costs, and injunctive relief should be awarded. To complicate matters further, the courts are in substantial disagreement as to many of the basic principles governing the resolution of those questions.

For the reasons set forth below, the Court concludes that § 553 applies to this case, but not § 605; that any statutory damages should be a reasonable estimate of plaintiff's actual damages and should not include any component for punishment or deterrence; that the act of purchasing and installing a descrambling device is ordinarily sufficient to demonstrate "willful" conduct subject to enhanced damages; and that the use of a descrambler for home viewing of cable television programs is ordinarily sufficient to demonstrate that the act was committed for purposes of "private financial gain." The Court also finds that plaintiff is entitled to injunctive relief and an award of costs and reasonable attorneys' fees.

I. Background

The following facts are taken as true.² Charter is a cable operator that provides cable services to its customers. Compl. ¶ 7. Charter customers pay a monthly fee depending upon the level of service and amount of programming they select and purchase. Compl. ¶ 9. At all relevant times, Charter has offered basic cable channels, premium channels, such as Home Box Office, Cinemax, and Showtime, and pay-per-view channels for movies and special events. Compl. ¶ 11. Subscribers pay fixed monthly fees for access to basic cable channels and premium channels, and pay one-time charges for access to pay-per-view selections, which vary according to the particular program selected. Compl. ¶¶ 9, 18.

Although the complaint does not so specifically state, it appears that Charter receives radio signals sent via satellites by broadcasters and converts them into cable signals for delivery to subscribers. See, e.g., United States v. Norris, 88 F.3d 462, 467 (7th Cir.1996). The cable signals are typically delivered by a coaxial cable directly to the subscriber's home. Id.

Charter's cable signals for premium channels and pay-per-view services are electronically coded or scrambled so that they must be decoded by electronic decoding equipment for the signals to be viewed clearly on a television receiver or monitor. Compl. ¶ 12. To decode the signals, Charter provides subscribers of these services with electronic decoding equipment referred to as converters. Compl. ¶ 13. Charter's converters are programmed from a central location to decode the signals and thereby enable the subscriber to view the purchased level of service. Compl. ¶ 14.

Charter programs each of its converters specifically to permit the subscriber to view only the level of service purchased. Id.

To receive pay-per-view service, the subscriber's converter box must be addressable. Compl. ¶ 16. The subscriber either telephones Charter and requests to view the specific movie or event or orders that movie or event using a remote control device. Compl. ¶ 17. Charter then programs the addressable converter box to descramble that movie or event, enabling the subscriber to receive a nonscrambled signal during the time of the broadcast. Id. The price of pay-per-view movies or events varies but ranges from $3.95 for certain movies to approximately $49.95 for certain sporting or other special events. Compl. ¶ 18. Charter subscribers are billed monthly for pay-per-view movies and events ordered during the previous month. Id.

Unauthorized decoders or descramblers are devices that have been designed or modified to defeat the scrambling or addressable security functions of Charter's cable system. Compl. ¶ 19. Ordinarily, a person seeking to steal cable television signals will purchase the most basic service available and use the illegal device to access premium services and pay-per-view movies and events. See Compl. ¶ 9.

In connection with AT & T Broadband v. Modern Electronics, Inc., 8:03-00430 (D.Neb. Sept. 17, 2002), Charter obtained business records of an entity called Modern Electronics. Compl. ¶ 20. Those business records indicate that Burdulis ordered and purchased from Modern Electronics a cable theft device designed to effect the unauthorized reception of cable programming. Compl. ¶ 21. Burdulis had also ordered only a particular level of service from Charter for the relevant time period. Compl. ¶ 8.

Burdulis did not answer or otherwise respond to the complaint, and the clerk has entered a default.

II. Legal Analysis

A. The Applicability of Sections 553 and 605

Charter contends that it is entitled to recover damages under both 47 U.S.C. § 553 and 47 U.S.C. § 605.³ Although §§ 553 and 605 are similar in many respects, § 605 provides for a greater potential recovery of damages than § 553. Moreover, an award of costs and attorneys' fees is mandated for a violation of § 605, but such an award is discretionary as to a violation of § 553. Because any award of damages in this case will depend upon which provision of Title 47 applies, this Court must examine the applicability of both § 553 and § 605.

Section 553 provides that "[n]o person shall intercept or receive or assist in intercepting or receiving any communications service offered over a cable system, unless specifically authorized to do so by a cable operator or as may otherwise be specifically authorized by law." 47 U.S.C. § 553(a)(1). There is no question that defendant's conduct subjects him to liability under § 553.

Section 605 provides that "[n]o person not being entitled thereto shall receive or assist in receiving any interstate or foreign communication by radio and use such communication (or any information therein contained) for his own benefit or for the benefit of another not entitled thereto." 47 U.S.C. § 605(a). Section 605 thus prohibits the unauthorized interception or reception of radio communications. Although Charter does not explain why defendant's interception or reception of Charter cable transmissions violated § 605, cable operators in other cases have theorized, as set forth below, that § 605 applies to such actions because the intercepted cable transmissions previously had been transmitted to the cable operator via radio from satellites. See, e.g., International Cablevision, Inc. v. Sykes, 75 F.3d 123 (2d Cir.1996) [Sykes II].

The First Circuit has not yet decided whether theft of cable services transmitted via wire violates § 605, and the Courts of Appeals that have examined the issue are split. Compare Sykes II, 75 F.3d at 133 (concluding that unauthorized interception of cable transmissions violates both §§ 553 and 605), with Norris, 88 F.3d at 469 (holding that theft of cable services does not violate § 605), and TKR Cable Co. v. Cable City Corp., 267 F.3d 196, 197 (3d Cir.2001) (same).

Reported decisions from District Courts in this circuit reveal a similar split. Compare Century ML-Cable Corp. v. Diaz, 39 F.Supp.2d 121, 123-24 (D.P.R.1999) (stating that both § 553 and § 605 prohibit the sale of illegal cable theft devices), and United States v. Beale, 681 F.Supp. 74 (D.Me.1988) (same), with Kingvision Pay-Per-View, Ltd. v. Rocca, 181 F.Supp.2d 29 (D.N.H.2002) (concluding that § 605 does not encompass cable theft), and TCI Cablevision of New Eng. v. Pier House Inn, Inc., 930 F.Supp. 727, 734 (D.R.I.1996) (same).

For the reasons discussed below, the Court concludes that the defendant's actions do not violate § 605. The Court first will analyze the language and history of § 605 and then will examine the reasoning of the courts in Sykes II, Norris, and TKR Cable.

"[T]he starting point for interpreting a statute is the language of the statute itself." Consumer Prod. Safety Comm'n v. GTE Sylvania, Inc., 447 U.S. 102, 108, 100 S.Ct. 2051, 64 L.Ed.2d 766 (1980); accord Arnold v. United Parcel Serv., Inc., 136 F.3d 854, 857 (1st Cir.1998). As noted, Section 605 applies to the interception of "any interstate or foreign communication by radio." 47 U.S.C. § 605(a). The term "communication by radio" is defined under the statute to mean the "transmission by radio of ... signals... of all kinds...." 47 U.S.C. § 153(33).⁴ Section 605 does not, however, refer to the interception of a "communication by wire," which is also a...